Five Ways to Grow Your Money When You’ve Leveled Up Professionally

You’ve worked hard and have made strides in your career. Despite racking up some debt, including perhaps student loans, you’re climbing and may be even seen as a mover and a shaker. And time will come —if it hasn’t already— when the coveted word “senior” or “partner” will be added to your title and bring with it a sweet raise. Before you know it—boom!— you’ll be in the money.

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Okay, maybe you won’t become rich overnight, but the victory dance will still be yours. But what happens after the celebration? How do you make sure that the extra money is put to work for you and not squandered?

Christina Kramlich, Senior Director of SoFi Invest, has got the answers, and we’ve wrapped them up in a five-point, mo’ money gift box with your name on it:

1. Get the urge to splurge out of your system

By all means throw a little money at having some fun when getting a raise. You deserve it, after all your hard work. But be careful; don’t go all out and start living like there’s no tomorrow. Instead, treat yourself to a short vacation, a fancy dinner or join the gym you couldn’t afford before.

“Spend reasonably and on something worthwhile,” advises Kramlich. “While it’s fun to dump cash into the here and now, that money should be an investment in your tomorrow, not something that will cause you to take a few steps back with your long-term goals.”

2. Plan like you mean it!

Get to work giving some serious thought to your future goals and the best ways to use your new funds to reach them. While this may go against your inner drive and natural gung-ho spirit, it’s best to hold that money tight until you have a solid financial game plan in place.

Related: Where Your Money is Really Going — How to Minimize Wealth Management Fees

“Focus on ways to set yourself up for success. With this new income, think about what you can achieve sooner rather than later,” says Kramlich. “Focus on goals you want to hit in the next year or in the next five. For example, do you want to buy your first home, attain a greater work-life balance, or get knee-deep in investing to ramp up retirement savings? Maybe you want to do all of those things.” To see if you are on track for your retirement consult SoFi’s retirement calculator.

Start by making a list of everything you want to achieve and what it will take to get there. “Visualize where you want to be professionally and personally, and note your ‘goal boosters’ — checkpoints you’ll need to pass to reach your ultimate goals,” says Kramlich. “Then, list your ‘goal killers,’ the things that can get in the way of reaching your objectives, such as looming debt. Seeing the boosters and killers side by side will help put your goals in perspective, so that you can plot a course of action that makes the most sense for you.”

3. Examine your package—your benefits package, that is

With more money in your bank account each month, it’s time to take full advantage of the retirement benefits offered by your employer. Wade through the tome that is your benefits package. Sure, it’s dry and boring—we get it—but your future self will thank you for putting in the time it takes to really understand it all.

Because of the magic of compound interest and reinvested dividends, the earlier you start saving for retirement, the better. “Remember, there are a lot of things in this world you can borrow for,” says Kramlich. “You can get a loan to attend school, remodel a house, buy a car, or even to go on a vacation. But you can’t borrow to retire.”

So, if you’re offered a 401(k) plan, sign up and make sure you contribute an amount that’s right for you. If your employer offers matching contributions, put in enough so you get the full match. For instance, if your employer matches 100% up to 6% of your income, contribute the full 6% if you can. “That’s free money you should never leave on the table,” says Kramlich.

If your employer doesn’t offer a 401(k) plan, contribute on a regular basis to either a taxable account, such as a money market account or investment account with a brokerage firm, or to a traditional or Roth IRA. Like a 401(k), a traditional IRA is tax-deferred, which means that the money you contribute grows tax-free until you withdraw it. Contributions you make to a Roth IRA, on the other hand, are made with after-tax dollars, so you won’t be taxed again when you withdraw. Either way, make sure you plan to keep the funds in your retirement account until you’re 59 1/2; if you withdraw earlier than that, your funds will most likely be subject to a 10% penalty.

4. Start clearing the debt slate

It’s really easy to accumulate bad debt, such as credit card debt that you carry over each month, when you’re having trouble making ends meet. And, what’s worse, that debt snowballs quickly. But a raise in pay offers an opportunity to re-budget and meet debt head on.

Recommended: Save for Retirement or Pay Down Student Loans — Where Should You Focus?

“Take a close look at your credit card debt and any student loan debt you might have,” says Kramlich. “Examine the balances and interest rates, and determine if refinancing is the way to go. Refinancing student loans to aggressively pay them off as soon as possible is a great option for many. The quicker you get them out of the way, the more money you’ll have to put toward your big-ticket goals.”

5. Beware of lifestyle inflation

Once you’ve got a plan that works for you and includes taking advantage of employer benefits and paying down debt effectively, you’re ready to put it into action. And soon after you do, you’ll start feeling the rewards. But just like when you first got your raise, you’ll likely be tempted to upgrade your lifestyle. Who wouldn’t? But do yourself a favor: Don’t—at least not until you examine the trade-offs.

“If you’re serious about paying off your debt and saving for your future, don’t do anything to sabotage those efforts,” warns Kramlich. “Calculate how much you want to pay down on your debt, how much you want to put toward other goals, and then allocate what’s left reasonably. You’ll likely find that tackling your goals is worth delaying lifestyle gratifications.”

As soon as you get a boost in income, look at the big picture and devise a strategy to put your money to work for you. With a clear plan in place, you’ll be able to invest in your future in ways that didn’t seem possible before.