Hitting the $100K annual income mark is a significant achievement. It puts you in the league of 16.4% of the US households that have achieved this financial milestone, as per Statista’s survey in 2022. Though this six-figure income opens up new possibilities and opportunities, it also comes with a responsibility to manage it wisely. Making smart decisions with your money will help secure your financial future and improve your quality of life.
Read on to learn 13 things to do when you start making $100K.
Start Saving Regularly
A higher income should be coupled with regular savings. Aim to save at least 20% of your monthly income towards emergency savings, college savings for children, life insurance, and long-term care insurance. A poll by Bankrate on 1000 Americans found that 27% of Americans have no emergency savings, and only 44% had an emergency savings of $1000. Building an emergency fund that covers 6 to 12 months of expenses is essential. This helps in unexpected events, including job loss and medical emergencies. You can set up automatic transfers to make it easier for you.
Invest In Retirement Plans
With $100K, you should contribute the maximum to retirement accounts like a 401(k) or IRA. This ensures you benefit from tax advantages and compound interest. A poll by SurveyMonkey and CNBC says that 53% of Americans are behind schedule in retirement planning and savings. Find out if your employer can offer a matching contribution.
Diversify Investments
Beyond retirement accounts, look into other investment options. Diversifying your portfolio reduces risk and enhances returns. Explore potential stocks, bonds, mutual funds, and real estate options. Make sure to consult a financial advisor for guidance.
Pay Off High-Interest Debt
If you have a credit card or loan debt with high interest rates, pay it off on priority. High-interest debt can eat into your income quickly. A survey has revealed that 36% of Americans out of 2000 have more credit card debt than emergency savings. By getting rid of this debt, you free up more money for saving and investing. Consider consolidating debt to reduce interest rates.
Upgrade Your Healthcare Plan
Making $100K allows you to invest in better healthcare. Consider upgrading to a more comprehensive health insurance plan. Preventive care and regular checkups can save money in the long run. Investing in health now prevents more expensive issues later.
Upgrade Your Skills
If you had delayed skill enhancement due to rising inflation, interest rates, and recession fears, now is the time to enroll for those courses, certifications, and training. Upgrading your skills ensures you remain competitive in the job market. This can lead to even higher income opportunities. As per a Gallup report, 71% of pollsters who went for upskilling think it has enhanced their job satisfaction, 2 in 3 workers say it has raised their standard of living and quality of life, and 17% are more likely to be in a good job.
Pamper Yourself
As much as you must save, you should also enjoy the fruits of your labor. Occasionally, treat yourself to a nice dinner, spa day, or weekend getaway. Balancing work and life is crucial for mental health. Rewarding yourself can be motivating and prevent burnout. However, ensure these indulgences are within reason and don’t derail your financial goals.
Prioritize Health And Fitness
Joining a gym or engaging in regular fitness activities is an excellent use of your increased income. In 2023, it was found that only 22.4% of American men and 19.9% of American women participate in physical activities daily. Exercise reduces stress and improves productivity. Investing in fitness now can save on healthcare costs later. Fitness memberships and personal trainers are great ways to ensure you stay on track and keep fit.
Socialize
You have worked hard and often ignored friends and family to reach this position. Now is the time to prioritize friends and family. A strong network of friends is crucial for emotional well-being and life satisfaction. Make time to visit relations and meet friends. Join clubs to build new relationships. Your financial success is more meaningful when shared with the people who matter most.
Donate
With financial stability comes the opportunity to give back. Consider donating to charities or causes that resonate with you. Whether it’s a local shelter or an environmental cause, giving can be incredibly fulfilling. As per a YouGov survey, 69% of Americans (two-thirds) have donated money to a charitable cause or organization. Many charities offer tax deductions for donations. Research organizations thoroughly to ensure your money is going to a good cause.
Take Time To Travel
With more disposable income, take out time to travel. Seeing new places and cultures broadens your perspective and rejuvenates your spirit. Budget for travel without impacting your savings and investments. Whether a local road trip or an international adventure, travel creates lifelong memories.
Consider Sustainable Living
As your income grows, consider adopting a more sustainable lifestyle, including investing in renewable energy, such as solar panels for your home, and buying products from eco-friendly brands. Sustainable choices not only help the environment but also lead to long-term cost savings.
Hire A Financial Advisor
While you may have the knowledge of managing your money, a financial advisor can offer expert guidance on saving, investing, and budgeting. An advisor can also help you create a long-term financial plan. Ask for recommendations from your colleagues for a financial advisor who can act in your best interest.