Many individuals, particularly company owners and executives, have a six-figure salary as their ultimate aim. From a status point of view, there is a sense of pride after you earn at least $100,000 annually. The problem that many people have is thinking that income is no longer a source of concern once they achieve that milestone.

There is a perception that you can spend more money after you have a six-figure salary. For example, you can go on vacation, upgrade your appliances, take your family to dinner, and buy coffee every morning instead of brewing it at home. It is a misconception to think that you should live a more luxurious lifestyle because of increased income. The first thing to do is reevaluate how you store your money now that it can work for you.

Contrary to popular belief, the average American should be planning for retirement immediately after graduating high school. As a general rule, a retiree will require roughly 80% of their yearly pre-retirement income to maintain a comparable level of life after retirement. That means saving approximately 10% of all income throughout your working life. Aim to contribute the maximum amount you can afford to a Roth IRA each year. 

In addition to monitoring current finances, look at debt closely. Liabilities should take precedence over any luxury expenses. Credit card debt is called bad debt because it will consume your wealth in interest payments. Finalize any loans you have on vehicles and pay off as many loans as possible. 

Prepare for future arrears as well as clearing up past debt. Save six to twelve months’ worth of expenses in liquid assets, suggest experts. This will cover unforeseen circumstances like loss of employment, transportation issues, or medical emergencies.

Before altering your lifestyle, get help from a wealth adviser. They will review your short- and long-term goals and help you plan and budget accordingly. Your tax bracket will also be higher with a six-figure income, so money needs to be set aside to accommodate. If you operate a company, seek an adviser who owns a business. They will be able to provide you with advice based on experience. Ensure your adviser knows stock options if you are an executive with stock options. Look for a wealth adviser who places a strong emphasis on education, uses financial planning as a process, and will provide you with a financial plan customized to your current lifestyle and future.

This article was originally published at johnjbowmanjraccountant.wordpress.com.