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Yet, a sudden increase in income can cause issues that can set you back financially.
From overspending to not investing properly, a sudden increase in income can take some adjusting to.
Trying to hit $100,000 in savings?
Avoid these six costly mistakes along the way.
However, budget basics are always essential to good financial health.
Allocate funds towards savings, investments, and necessary expenses, Ryze said.
I advise using budgeting tools or apps to monitor spending and ensure you live within your means.
You must have at least three to six months worth of living expenses as your emergency fund.
I suggest directing a portion of your increased income towards bolstering your emergency fund.
This move capitalizes on the income increase while maintaining financial discipline, Salahi said.
I recommend allocating at least 50% of the rise to savings or investments.
One of the best options is contributing to an IRA or Roth IRA for additional retirement savings.
This not only helps manage risk but also positions you to capture growth indifferent market sectors.
One of the best returns on investment you could get is from investing in yourself.
You should consider setting aside a portion of your income for charitable donations.
It can also help you with tax benefits.
Asudden income increaseis the perfect time to reassess your financial goals and create a roadmap to achieve them.
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