3 Ways I Spend Raises, Bonuses, Extra Income to Build Wealth
I’ve enjoyed earning raises as I’ve grown professionally, and I don’t usually change much in my life in response. It has served me well as I have adjusted to living with different income levels, both lower and higher, lately.
For example, after going freelance in 2019 as a writer, editor, speaker, and coach, my income temporarily declined. But I had planned for this change and knew that I could count on my savings, in part, as I worked to increase my income.
As I pursued my new career path – including networking and showcasing myself, and pursuing my speaking goals by teaching workshops – I grew. But then the pandemic struck. It was hard. Complete stop. But I was grateful to be OK and to be able to work remotely.
As 2020 progressed, I expanded my (virtual) relationships, took on additional projects in the evenings, and took on new roles. Soon I was making more money than in my previous job. And I had a reduction in some expenses since I was spending so lots of time at home.
As my income continued to increase, I never significantly increased my expenses, even though I could. And I continue to drive my beloved 12 year old car.
Today I’m sharing my story to say that we can adapt when our income levels go up and down. And we can use raises, bonuses and other additional income for our future. Although, I would add, spending on temporary pleasures Is have its place. Life is meant to be lived.
Here are three ways I used my extra funds to build wealth.
Allocate money to after-tax investments
During my professional life, I have made pre-tax retirement planning a priority. When I started making more money, I decided to put some extra money into after-tax investments, like individual stocks, index funds, and cryptocurrencies.
The market is unpredictable, and when the stock market has crashed, so are my portfolios. Some of them wrong. But I remained impassive, and since then I have seen my accounts grow. (For example, as of this writing, my cryptocurrency portfolio is at an all time high. It’s important to note, however, that cryptocurrency is volatile, and that growth could change.) I’m playing the long game with my finances and I continue to invest in my future.
Inject money into savings
I don’t want to lose my financial safety net if I can help it. So whenever my income increases, I put money in my savings account to help cover unforeseen expenses, if they occur. I keep using a savings trick to ‘hide’ money from myself so that I can’t accidentally spend it. And because I couldn’t spend any money on travel and my other entertainment expenses are reduced, I had more money to cover my bills, savings goals, etc.
Invest in professional development
As someone who writes stories for a living, I love to learn. So when I found myself with additional funds from freelance writing, I used the money to help cover a full speaking course. I wasn’t thrilled to pay that nearly $ 4,000 bill – phew – and really wondered if it was worth it. But I think it’s a priority to maintain my professional skills by reading in my field (with free and paid resources), participating in trainings, etc. And I think the course, when completed, will help me pursue my goals to speak more.
In fact, I still think that investing strategically in myself is a good idea (when I can), whether through lessons, books, or whatever. And that we are all worth the investment, when we have the money and make the effort.
I am grateful that I made these three money moves, even during the tough times. I would have taken some of these steps even with less income. But, as I had the opportunity, I decided to use more funds for good. Because I appreciate the growth and the value of having options. And investing in myself and my future is a way to prioritize both.