09/08/2026
What happens to your finances when your income goes up?
• More investing.
At the very least, keep the percentage that you're investing the same. If you were investing 10% of a $150k income, continue investing 10% of your new $170k income.
I like the idea of putting 1/3 of a raise towards savings (which typically means increasing your savings percentage).
• More "lifestyle creep".
Personal finance communities make it sound like a bad thing, it usually isn’t.
Assuming you’re already saving appropriately, when you make more, you can spend more. The point of money is to enjoy it.
Intentionally spend 1/3 of your raise on things that make you happy.
• More taxes.
Your raise may be subject to a higher marginal tax rate, and the higher income may phase you out of certain deductions.
I generally assume 1/3 of the raise will go towards taxes until we know the actual number.
• Less income covered by Social Security.
In 2026, Social Security tax stops once your earned income reaches $184,500.
If your wages are above that amount, consider redirecting the 6.2% in tax savings towards investments and savings.
• New planning opportunities.
As income increases, things like retirement contributions, charitable giving, investment taxes, itemized deductions, and where you hold different investments can make a bigger impact on your overall tax and financial planning.
Revisit your financial plan to make sure your saving, spending, and tax strategies are aligned.
