Okay, next up is Tabitha's question. She says, "Good morning. I'm 25, and I may possibly be getting a new job that pays $112,000 more than my current one. So, congrats. That's exciting. Are there any tips or suggestions on what to do with this extra cash and with this pay raise? Like, how should she be thinking about maximizing this opportunity?" Well, I love that you're thinking about it because so often what happens is we work in a job and it's going great, and end of the year employer raises come up, and your employer says, "Hey, Tabitha, you've been doing something great. I'm going to give you a pay raise." You're like, "Yes, that's awesome. That's amazing. My paycheck's going to be bigger. It's going to be awesome." And then you just celebrate that. You don't actually think through, "Oh, okay, there are some practical implications around this." And so what I would tell you is one of the very best things you can do as you have pay raises or if you're someone who gets paid bonus income or you're on some sort of like sales commission cycles, every time your income changes, you need to think about how do I also change the other things that are tied to my income. And the number one most important, in my opinion, is your savings rate. Let's say that you had done the math and you figured out, based on following the financial order of operations, Brian, that we've got. If you go to moneyguy.com/resources and you're tracking through where you should be saving and you're maybe you're in Step six, you're like, "Alright, I'm trying to build up Step six, and I'm saving 10% into my 401k." Well, you may recognize, "Hey, you know what? This actually allows me to do is, yeah, if I just leave it at 10%, my pay goes up, my 401k contribution will naturally should go up. But maybe, just maybe, could I move from 10% to 12% because of this pay raise? Would that allow me to not only increase the percentage that I'm saving of my income but also the actual dollar amount that I have going into my accounts?" So, if you can think through that, I would think through, "Okay, I've got money coming in. First, I need time." I teach my kids this. Anytime new money comes in, there are three things I tell them to think about. They get to give first, save second, spend third. I think for us, even, we get pay raises or bonuses, we ought to go through that same sort of thing. Is there some portion of this that I feel a duty and obligation I ought to give? Is there some portion that I should be saving and investing? There is. And then whatever's left over, I think it's okay to spend if you want to go increase lifestyle or something like that. I think there's nothing wrong with that.
Yeah, my big echo here is that lifestyle is second, and that's not what Americans do. I mean, I think most people, when they hear they're getting a big pay raise, they start thinking about what car can I look cool to my friends and neighbors in, and should I go upgrade the apartment or the house to reflect my new status. Don't do that. Lifestyle is second. You should think future self first because I'm telling you, we have no one in our annual wealth survey who looks back and tells their younger self, "Man, save less." No, everybody says the exact opposite, "Save and invest more." Because I want you to put yourself, your future self first, lifestyle second. And that's where the FOO for you is going to come into play because if you can figure out where you are in the financial order of operations, you'll know exactly what to do with your next dollar. And then, I was going to put the content team on test here is that we have a thing you can go, a resource you can go to moneyguy.com/resources. We have, "What Can 25% Do for You?" And somebody who's 25 years old, I mean, look at this. This ought to get you excited. If you can just start saving and investing, and I know for most 20-somethings, reaching 25% of your gross income is aspirational. But, Tabitha, you sound like you're getting a big pay raise. Kudos to you. This might be your fast-tracking of reaching 25% and just setting yourself up for Easy Street to the point that your future self, remember that's priority number one, wants to give you a big sloppy hug and a kiss because there's going to be tears of joy just coming down their face. Give yourself that opportunity to have that celebration in the future by using this moment of success for yourself to be a celebration for your future self. For more information, check out our
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