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    3 ways I use raises and bonuses to build wealth instead of spending them immediately

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    The author, Leslie Quander Wooldridge.

    When I started working for myself, my income declined temporarily. 
    But when I sought out and took on additional work, I started making more money. 
    Instead of substantially increasing my spending, I poured money into investments, added to my savings, and invested in professional development.

    I’ve appreciated earning raises as I’ve grown professionally, and I typically don’t change much about my life in response. This has served me well, as I’ve adjusted to living with different income levels, both lower and higher, during recent times. 

    For instance, after I pursued self-employment in 2019 as a writer, editor, speaker, and coach, my income went down temporarily. But I’d planned for that change and knew I could rely on my savings, in part, as I worked to raise my income.

    As I continued with my new career journey — including networking and pitching myself, and going after my speaking goals by teaching workshops — I made progress. But then the pandemic hit. It was difficult. Full stop. But I was thankful to be OK and able to work remotely. 

    As 2020 marched on, I broadened (virtual) relationships, took on additional projects in the evenings, and stepped into new roles. Soon I was making more money than I had at my previous staff job. And I had a reduction in some expenses since I was spending so much time at home. 

    As my income has continued to rise, I’ve never substantially increased my spending — even though I could. And I continue driving my beloved 12-year-old car. 

    Today, I’m sharing my story to say we can adjust when our income levels shift up and down. And we can use raises, bonuses, and other extra income to benefit our future selves. Though, I’d add, spending on temporary pleasures does have its place. Life is meant to be lived.

    Here are three ways I’ve used my additional funds to build wealth.

    1. Allocate money for after-tax investments

    During my working life, I’ve made pre-tax retirement planning a priority. When I started making more money, I decided to put extra funds into after-tax investments, like individual stocks, index funds, and cryptocurrencies. 

    The market is unpredictable, and when the stock market crashed, so did my portfolios. Some of them badly. But I stayed unemotional,  and have since seen my accounts grow. I’m playing the long game with my finances and am continuing to invest in my future. 

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    2. Funnel money into savings 

    I don’t want to lose my financial safety net, if I can help it. So whenever my income goes up, I put money into my high-yield savings account to help cover unexpected expenses, if they happen. I continue to use a savings trick to “hide” money from myself so I can’t accidentally spend it. And since I haven’t been able to spend money on travel, and my other entertainment expenses are reduced, I’ve had more money to cover bills, savings goals, and more. 

    3. Invest in professional development

    As a person who writes stories for a living, I love learning. So when I found myself with extra funds from freelance writing, I used the money to help cover a comprehensive speaking course. I wasn’t thrilled about paying that nearly $4,000 bill — oof — and really have considered whether it was worth it. But, I do think it’s a priority to keep up my professional skills by reading in my field (with both free and paid resources), participating in training, and more. And I figure the course, when I finish it, will help me pursue my goals to do more speaking. 

    In fact, I continue to think that strategically investing in myself is a good idea (when I can), whether it’s through courses, books, or something else. And that we all are worth the investment, when we have the money and make the effort. 

    I’m thankful to have made these three money moves, even during difficult times. I would have taken some of these steps even with less income. But, since I had the opportunity, I decided to use more funds for good. Because I appreciate growth and value having options. And investing in myself, and my future, is one way to prioritize both.

    This article was originally published in January 2021.

    Read the original article on Business Insider


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