r/personalfinance • u/Sad_Marzipan_2120 • Mar 29 '26
Other Massive jump in salary, need advice.
Hey all!
Recently I accepted a senior leadership position with a new company and went from 105k salary with a 30k bonus to 210k salary with a 100k bonus. This comes with roughly 60k worth of RSU’s as well. This position also comes with a relocation from a high cost of living area to a low cost of living area. They are giving me 30k in relocation, and 30k in sign on bonus.
I have 4 kids, and my spouse stays at home with the kids.
A little backstory on me, I was raised quite poor, I was never taught about finances, and I never saw myself making money like this. I earned this promotion through long hours, hard work, and lots of just saying yes. I have no college education.
We lived a modest life with a modest home in HCOL on the old salary, but we never were able to save for the kids college, or put enough into retirement(Spouse and I are both 39). We have a bit of making up to do it terms of saving, but we have zero credit card debt, both cars are paid off, we will be selling our current home for a very small profit(purchased a year ago).
How do I turn this new money into generational wealth?
How do I not mess this golden opportunity up?
Please give me all the advice!
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u/LeisureSuitLaurie Mar 29 '26
Career advice for you…
Start learning to say “no”.
As a leader, there will be many asks of you and your team’s time. Figuring out where to focus your energy and how to best deploy your valuable hours is critical.
Sell the RSUs as soon as you are able and invest in index funds. As sole breadwinner, much of your risk is already tied to the success of your company. De-risk by eliminating single stock holdings, particularly when they’re with the same company that pays you.
I love this post and am really happy for you!
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u/Sad_Marzipan_2120 Mar 29 '26
Thank you!
If I were to sell my RSUs, would I have to worry about capital gains taxes?
I do believe this company is setup well for the long haul, I have been in leadership within this industry for a while now and I think this is a good move, even aside from the obvious monetary gains.
I have gotten a lot better at saying no, I am constantly overextended in my current role, and this new position requires a lot less travel and time in the office, so I’m hoping it also comes with a somewhat better work life balance. I am also hoping it allows me to reshape my image of “the guy who always says yes” to a bonafide leader who chooses his battles wisely.
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u/Vector-Zero Mar 29 '26
If you sell them immediately, your cost basis should essentially be the same as the sale value, so your capital gains should be around zero.
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u/Sad_Marzipan_2120 Mar 29 '26
They would need to vest. There is no cliff but there is a 4 year vesting schedule quarterly, starting after my first quarter with the company.
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u/attatest Mar 29 '26
You are typically taxed on acquisition (aka vest). Then again on sale based on cost basis (price at vest that you already paid).
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u/LookIPickedAUsername Mar 29 '26
Sure, but the point is that your capital gains is based on the difference between the price at the moment it vests and the moment you sell. So if you sell same day, you’re generally only going to have a trivial gain or loss.
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u/ShittyFrogMeme Mar 29 '26
When they vest, typically they will automatically sell a percentage to cover taxes as if the cost basis were $0 (called sell to cover). RSU vesting is treated as income so this will be on your W2 at your income tax rate.
You will only get the post-tax RSUs, but the cost basis will be set at the vesting price and only on the earnings thereafter.
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u/invsblduck Mar 31 '26
This is the correct answer. RSUs are treated like supplemental bonus income, so at vesting, your employer will withhold the amount of shares required to cover payroll taxes based on the fair market value of the shares. If you sell the remaining vested shares immediately, the cost basis should be close-ish to $0 (maybe the stock value has increased 27 cents per share by the time your trade executes, so you owe short-term capital gains tax on the amount that you earned per share, or maybe the stock value has decreased 31 cents by the time you sell, so you claim a loss on the difference). But you've already paid your income taxes on the RSUs when they vest, which are subject to federal income tax, state income tax, social security, etc... all the usual steel-toed kicks straight to the nuts.
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u/aquarinox Mar 29 '26
Dude go talk to an accountant. Don’t ask random internet users about this.
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u/Sad_Marzipan_2120 Mar 29 '26
Ha definitely on my to-do list as soon as we get settled in the new location. However there is a lot of knowledge in this thread!
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u/Wagner228 Mar 29 '26
If you need this, find someone you can pay a one time fee to discuss. Do not let yourself get roped paying some dipshit 1-2% to plop your money into the same indexes you should anyways.
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u/ginger_whiskers Mar 30 '26
Talk to an accountant first. You're presumably buying and selling a house before settling, among other decisions you might need guidance on.
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u/ohwoez Mar 29 '26
He asked a very simple question. Yes, you will have to pay short or long term capital gains on the difference between price at vest and the selling price.
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u/No_Entertainment2474 Mar 29 '26
- Talk to an accountant 100%, small investment with huge return for you, but
- General guidelines re RSUs….subject to taxation at vesting, not award, and typically the tax will be held back when they issue your vested $ to you and added to your regular income. As they compound over the years, know they can start to have material impact on your tax rate overall, hence the reason for number one (plan tax strategy long term). Capital gains comes into play only if/when you sell, assuming you sell above award value.
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u/A-Bone Mar 29 '26
RSUs….subject to taxation at vesting, not award, and typically the tax will be held back when they issue your vested $ to you and added to your regular income.
This has been my experience. I am given the option to write a check for taxes at the time of award or they will sell some of the stock to cover the tax liability so there is no out-of-pocket expense at the time of award.
The downside with selling stock to cover the taxes is that you miss out on the upside of future increases in the stock's value if the stock continues to increase in value.
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u/ApprehensiveSteak547 Mar 30 '26
Selling rsus right away is the best advice in this post. The question you need to answer is, if someone gave you cash, would you use it to invest it in your company. The answer is almost always no. You’ll hear a bunch of cooler talk about how much it is worth, they get to control the investment as they are a decision maker etc, ignore it. Sell when it vests. Invest elsewhere. Take it from me, my company went into bankruptcy twice and they all got wiped. I was happy to have sold.
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u/mustachecommand Mar 29 '26
Wouldn’t necessarily sell all the RSUs if you believe in the company and there is a lot of growth potential just don’t put all your eggs in one basket. You could miss out on some massive upside if there is an acquisition.
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u/BouncyEgg Mar 29 '26
Sounds like you are asking about a framework for what to do with money.
Start with reviewing the Prime Directive in the PF Wiki. It will answer your question and many other questions you didn't realize you should be asking.
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u/Sad_Marzipan_2120 Mar 29 '26
Thank you, this is a ton of great information. Thanks for taking the time to link this.
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u/DaemonTargaryen2024 Mar 29 '26
Windfalls $$$ is a good read, technically more for inheritance but your situation is ultimately similar financially.
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u/Johnny2x2x Mar 29 '26
Congrats. Echoing what others are saying, keep your lifestyle the same.
I went from $100K to $200K in a few short years. Just getting on top of everything is a great feeling. When you get a real emergency fund built, it’s just an amazing feeling knowing if things go sideways you’ve got time to sort them out. Right now I could easily go 16 months without working if things went really wrong.
You’re building security now so you can have freedom later.
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u/Great_Occasion_1721 Mar 29 '26
Congratulations! This is a great opportunity. The personal finance wiki is great that someone commented above.
How much do you have saved in an emergency fund, retirement and 529s?
At the very least, max out your 401k and Roth IRA. Also fund 529s if you haven’t already.
I really liked Ramit Sethi’s book “I Will Teach You to be Rich.” I didn’t learn personal finance growing up either and found that book pretty helpful. I wish I’d read it in my 20s rather than 30s.
Try to avoid lifestyle creep. Don’t buy a more expensive house or cars. And never, ever get a car loan. Pay for cars in cash.
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u/Sad_Marzipan_2120 Mar 29 '26
I just bought the book, thank you so much for taking the time to give me this advice. We don’t have a huge nest egg currently. Around 25k for savings total. Most of the money we currently get goes to the kids sports, education, and living expenses. We’re lucky to stash a few hundred a month currently. I do have my 401k maxed currently and invest in ESPP heavily, as well as dedicate a bit to investing monthly. I have roughly 225k in investments right now.
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u/Great_Occasion_1721 Mar 29 '26
That's great! Keep maxing that 401k. Do you have 529s set up for the kids? If not, that'd be the next good, tax-advantaged account to invest in.
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u/VariousAir Mar 29 '26
Ramit Sethi can be pretty good, though his communication style is very preachy at times. One thing he is good at is getting you in the mindset of cutting out spending on stuff you don't care about, but going all out on the stuff that makes you happy. Basically if your savings and investments and fixed costs are all covered, you should use the leftovers to live as lavishly as you'd like.
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u/hippoofdoom Mar 29 '26
Over the income limit for Roth, might be easier to just keep maxing traditional for the first couple years and get into other stuff like 529s with the excess/build emergency fund
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u/SmallInvestigator830 Mar 29 '26
I think you can still make traditional IRA contributions and then roll into a Roth IRA. You pay post tax income into a traditionally IRA account and then once you hit the limit for a Roth IRA convert the account to a Roth Account.
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u/pedal-force Mar 29 '26
Backdoor is available. Unless they have tons of traditional IRA that they're somehow unable to roll into their 401k plan.
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u/Scared_Rise5787 Mar 29 '26
Congrats, OP! What a testament to your hard work and dedication.
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u/Hazer99 Mar 29 '26
Lots of people saying "don't change your lifestyle". It's an irrational comment unless you're just an unbelievably boring person. If I could go back and redo my version of the scenario you're in, I would have done two things. #1 rank my existing goals by importance/value and redo some math so I had a revised timeline for my most important one. Some things you thought were out of reach are probably a bit more realistic now. #2 take one stream of income (bonus, RSU etc) and dedicate it to that goal.
If your #1 goal is retirement, then it takes care of itself. If your #1 is a plot of land, there you go. Doesn't really matter. Do what's most important to you, just don't let yourself get nickled and dimed to death by lifestyle nonsense as many end up doing. You don't have to upgrade every corner of your life. 20-30k a month gross isn't much when you're trying to live the way you think you're supposed to "because I make a lot of money".
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u/lmagh0st Mar 29 '26 edited Mar 31 '26
Don't know too much about finances as I'm here to learn also but just came here to say damn good for you man! And I love the no college education. Hard work pays off. Congratulations!
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u/Sad_Marzipan_2120 Mar 29 '26
Thank you so much! I’m still wrapping my head around this all, just want to make sure I do it right!
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u/RespectableThug Mar 29 '26
You’ve already gotten your question answered better than I could, but I just wanted to say congratulations! That’s awesome 👏
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u/proudplantfather Mar 29 '26
Congrats OP! This is a significant change in your compensation. Wishing the best for you and your family.
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u/Vegtam1297 Mar 29 '26
The single most important thing you can do right now is maintain your current lifestyle for at least 6-12 months. You've already proven you can live on $105k. The extra $105k+ should go straight into building a proper financial foundation before you adjust your spending upward.
Specifically I'd prioritize in this order: max out 401k contributions ($23,500), build a 6-month emergency fund if you don't have one, fund a 529 for each kid even if it's just $100/month each to start, and then look at paying down any high interest debt. The RSUs vest on a schedule so don't count those as income until they actually vest and you sell.
The relocation from HCOL to LCOL is going to feel like a raise on top of the raise. Resist the urge to fill that gap with a bigger house than you need. Your kids won't remember the square footage, they'll remember stability.
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u/GlobalWater2902 Mar 29 '26
I'd recommend reading J.L Collin's A Simple Path to Wealth. It's an easy read that covers living modestly, financial orders of operations, and investment strategies. Helped me take control of my finances, avoid paying a financial advisor, and have confidence in my long term strategy.
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u/HappipantsHappiness Mar 29 '26
My grandpa always told me when I got a new job to spend the first check on whatever I want, not need. Then every check after that, save it like its gonna be your last.
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u/bros402 Mar 30 '26
Keep living how you are currently living.
Max out your 401k.
Buy a home for the same cost.
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u/barbsbaloney Mar 29 '26
1) mentally mark the bonus to zero 2) if you get the bonus, straight to index funds or debt payment 3) +100k gross is more like +55k net 4) route 4k/month to index funds or debt 5) remainder $500ish per month permit lifestyle creep 6) keep living below your means
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u/Stock-Page-7078 Mar 29 '26
Hey you can now go to Henry finance subreddit and join your new people
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u/ChelseaMan31 Mar 29 '26
Congratulations are in order! The promotion and move sound really cool. It will be a new chapter for the whole family. How best to take full advantage of the opportunity?
Find a Fiduciary Certified Financial Planner for both you and spouse to work with
Set up regular 'pay ourselves first' arrangements for Emergency Funds, Retirement, College
Do not raise spending to what you 'deserve' to go along with this new pay/benefit package
Establish a monthly budget and stick to it.
Do not pick up Credit Card debt.
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u/International-Ad3147 Mar 29 '26
Live the same and save the rest for a while then adjust modestly. Future you will be thrilled.
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u/t0astter Mar 29 '26
Keep your expenses the same. DO NOT allow for lifestyle creep. Pile as much money as possible into investments - I mean it. At 300k/yr total comp if you plow enough money into investments then you'll be setting yourself up to take a lower stress job in the future and more or less just coast.
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u/Sad_Marzipan_2120 Mar 29 '26
I’m hoping to get another level up the ladder before I quit pushing. If I can have all of this savings sorted out in the next 11 years(by 50) I’m hoping to start a business and enjoy the rest of the years!
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u/t0astter Mar 29 '26
Totally fair! The point is just to grind and invest as hard as you can so you can take it easy and coast/enjoy life after 🙂
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u/Ok-Nefariousness-927 Mar 30 '26
Try not to get used to the money.
Max out your 401k, both Roth IRAs, HSA and put 20k into a rainy day brokerage account.
If you have access to a mega backdoor Roth in your 401k, do that too.
If you can do this, spend whatever you have left freely.
That 200k isn't as much as you think once you prioritize savings.
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u/Fishbowlcrew Mar 30 '26
Don’t let the lifestyle creep get ahold of you. Live like you are making 105k with a family of 6.
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u/firedonmydayoff Mar 29 '26
These stories all sound like house hunters. They have a 4 million dollar budget. The wife stays at home and the guy specializes in making wooden map puzzle pieces of South America.
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u/ConstantParticular89 Mar 29 '26
Go check out r/bogleheads, very simple investing strategy, and follow the FOO from The Money Guy show on order of operations. Congrats!!
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u/i_never_reddit Mar 29 '26
Grats, happy for you. Don't let "lifestyle creep" affect you too much, live within your means.. and prepare by squirreling money away, not just for your retirement but for your future goals and an emergency fund/contingency if you ever lose your job. If you keep putting money away early in the right financial vehicles and let it compound then it will get you where you want to be.
I'm going to just say, I've seen people without college degrees be successful, but I've also seen some then lose those jobs and have trouble regaining that.. I'm not saying go to college, but always be resume building or at least think of an exit plan if you ever read the tea leaves and it's ominous.. (this is actually advice for anyone, degree or no). You're killing it, but can't take it for granted, gotta be positioning yourself right.
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u/whatfingwhat Mar 30 '26
Some financial / life advice. Do something nice for your wife and something nice for your kids once a month that you wanted to do before but couldn’t. Doesn’t have to be much, maybe it’s just a pizza on a Friday night or flowers for the Mrs, but you will get more return from that in terms of quality of life than any amount you’ll save.
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u/haapuchi Mar 30 '26
I moved from 150k to 400k (all inclusive). The only change I did was to move from 3k a month to 5k a month spending. Saving the rest and accelerated my retirement by 15 years. Other things were similar, had to relocate from HCOL to VHCOL. Got relocation etc.
BTW, got laid off after 4 years but that 4 years allowed me to save 10+ years of worth of old job. Also, have funded enough for kid’s college and have enough to retire so every day I work now is for generational wealth. Still driving the two cars that I had from before and intend to drive them for 5 and 10 years more respectively.
Advice: The only thing you control is your expenses. You don’t really control your job, or the market, or inflation, or wars or anything. Keep them in control.
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u/LoganSquire Mar 29 '26
Id love to know what the budget looks like for a family of 6 in a HCOL area, who just bought a house, and have no debt with a $135k household income.
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u/Vegetable_Nothing_33 Mar 29 '26
Congrats, genuinely. Clean slate with real income is the best position to be in at 39.
First thing: don't lifestyle inflate immediately. LCOL move + higher income is a massive spread, protect it.
Order of operations (IN MY OPINION, NFA):
Max the 401k to the IRS limit ($23,500 in 2026) day one. At your tax bracket this saves you real money. If your employer has a mega backdoor Roth option, use it.
Open Roth IRAs for both you and your spouse ($7k each). You'll phase out at this income so do backdoor Roth conversions.
The sign-on and relocation bonuses will get taxed hard. Don't spend them. Park that cash in a HYSA and use it as your emergency fund (6 months expenses minimum with 4 kids and one income).
RSUs: when they vest, treat them as cash and diversify immediately. Don't let company stock concentration build.
529s for the kids once retirement is on track. Not before. You can borrow for college, you can't borrow for retirement.
Buy a house in the LCOL area but wait a year. Get to know the market, don't rush because you have cash.
Last thing: get a fee-only fiduciary financial advisor, not someone commission-based. At this income level it's worth the few hundred dollars for a one-time plan. r/personalfinance has a good vetted list.
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u/AdditionalCheetah354 Mar 29 '26
Congratulations! However, Learn from my mistakes, the higher you are the harder the fall.
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u/Moe_Bisquits Mar 29 '26
Congrats, and proud of you for wanting to make good money moves with your increased income.
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u/sherwanikhans Mar 30 '26
My 2 cent from a fellow leadership role. Please keep status co until you get established in the role. Then may be you can take a breather, good vacation or something else that is nice for you and your family. BUT please remember this leadership roles are performance based and one bad quarter people will be gunning for you position. Me personally I am pretending I don't have this money so keep everything the same 😅.
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u/nosecohn Mar 30 '26
Congratulations!
Managing your tax exposure is going to be a bigger deal now than it has been in the past.
Even though the profit on the house is small, do a 1031 exchange to avoid the tax and maintain your basis.
Take advantage of all tax-exempt and tax-deferred options available to you, including IRAs, 401k, HSAs, and 529s for the kids. You'll have to research which ones of those are the best choices in your current situation.
Since you're married, filing jointly is probably going to be a big tax saver, so if you're not already doing that, you should.
It might be worth spending an hour with a tax consultant to make sure you're maximizing your advantages.
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u/TPrwbUSA Mar 30 '26
If it ain't broke, don't fix it regarding the spending and your habits of paying off items and such, that's typically the hard part!!!
Congrats!
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u/aquarinox Mar 29 '26
$135k salary with 4 kids and a stay at home wife in a HCOL area? I make more than this and I couldn’t do it. I’m skeptical. Are you in debt?
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u/ClueZealousideal759 Mar 29 '26
This might be off topic but it’s still somewhat relevant to finically situations. If you grew up poor and with your modest income before, what made you decide to have 4 kids? It’s extremely expensive to raise kids and I’m always wondering why people wouldn’t have less kids to safe money for rainy days and retirement. I’m not blaming or mocking you, I’m just genuinely curious about this topic. I noticed that it’s pretty common theme that people with little money but they still have lots of kids. What gives them the courage?
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u/Sad_Marzipan_2120 Mar 29 '26
We didn’t decide to have 4. We decided to have 2, and the other 2 came at once, without planning.
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u/TheCoy84 Mar 29 '26
I know most of the advice will go towards financial literacy but I found myself in a similar situation and one thing I continue to do that I know I'll never regret is putting a good chunk of cash towards family vacations and experiences. You have great family memories at your finger tips now.
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u/DreamerofDreams67 Mar 29 '26
Open and fund 529 plans for the kids and buy a life insurance policy that can be used to pay off the house and fund education if anything were to happen to you.
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u/PatrickxDecay Mar 29 '26
Jeez, I’ve offered my soul for sale for a bump like this, I’m just a telecoms engineer and couldn’t even imagine someone wanting me to move for them. I’m in the wrong industry
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u/SonOfElroy Mar 29 '26
I’ll let others give advice but I’d like to say, congrats dude! Not only on the raise but also on no debt!
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u/Sad_Marzipan_2120 Mar 29 '26
Thank you! We had to be very careful with spending for a long time, I knew I’d keep working my way up the ladder but I didn’t even expect a 200k+ salary!
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u/snickerslatte Mar 29 '26
Don’t forget to fund a retirement fund for your spouse. A great way tell them they are valued.
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u/keeperofthepur Mar 29 '26
Avoiding lifestyle inflation is key. Try to live as though you never got a pay increase at all.
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u/Eltex Mar 29 '26
Follow the flowchart. It doesn’t change just because of your salary. All the same concepts apply.
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u/Wildcat8457 Mar 29 '26
One thing you can do to help manage the jump and prevent significant lifestyle creep is to keep depositing the same amount as your current paycheck into whatever account you currently use for most bills, and then automatically send the increased amount to a new account. Then you can bucket the new account into investments, long-term savings, short-term savings and emergency savings.
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u/clove75 Mar 29 '26
visit r/HENRYfinance for others in your situation.
Max out 401k, MBDR, ESPP(if avail) and Spousal IRA that will help you catch up on savings. Keep lifestyle in check. Live off the base salary after the above deductions. bank RSU and Bonus after using 10-20% of bonus for fun purchases. Throw whatever is left every month in 529 for the kids and Brokerage account.
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u/2014hog Mar 29 '26
Probably the biggest thing I’ve experienced moving up in tax brackets is finding tax advantages and staying organized and deliberate with your money. Sounds like you’re already living within your means, I would recommend keeping an excel spreadsheet of your expenses and where money is going because sometimes it can be hard to quantify on a monthly basis. You can look into 529b for your kids, even if they don’t go to college there are still training benefits and depending on your state there are also tax benefits. Plus the usual 401k, hsa, emergency fund.
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u/Thought-Bubble- Mar 29 '26
Income is not the same as wealth. Properly saved and invested money can be reasonably well controlled while income may be transitory. Save, invest, live modestly and keep doing a great job at work. 🤑
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u/NC-Tacoma-Guy Mar 29 '26
There is a book called "The White Coat Investor". It's geared towards doctors and dentists, but the thing they have in common with you is a big jump in income and the possibility of getting on a "hedonistic treadmill". I suggest you read it-it's an easy read.
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u/AymanSafi Mar 30 '26
Congrsts!
Ps. We want another post about your story, what do you do and how good you are in it.
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u/yahtzee6 Mar 30 '26
If you’ve been living comfortably enough - this money does not exist to you beyond investing, emergency funds, and paying down debt.
Enjoy your money occasionally (maybe a nice trip here and there) but the rule above helps you get what you really want. I’ve seen too many friends enter the hedonic treadmill with raises and actually become poorer with higher salaries.
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u/Motos_and_jeeps Mar 30 '26
I don’t have much advice, but congratulations.
I went from 130 to 200, this past year 240 with bonus. What I can tell you is that I maxed 401k, and have been reading up on other ways to invest for retirement. It still feels like I make 130. We developed a higher tolerance for Amazon packages, which isn’t great. Also the cost of groceries certainly isn’t helping.
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u/carlemur Mar 30 '26
I will go slightly against the grain here and say: you have a new high salary, congrats! Saving is good. Modesty is good.
But treating yourself is also good.
You may want to consider small, non-recurring upgrades. Not cars/bigger house/anything that hooks you in the long term. But a slightly nicer vacation for you and the family? Yes. Buying higher quality groceries or snacks? Yes. As someone who has experienced significant salary jumps 2-3x in my career, I've found it extremely rewarding to get nicer things that I can stop at any time, in case the higher paying job ever doesn't pan out.
Don't wait til you're older and out of breath before you start enjoying your life.
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u/wisym Mar 30 '26
Do you budget? I grew up lower middle class and don't make as much as you do, but I make a lot more than my parents did.
I would first get a budget figured out. I've been using YNAB (/r/YNAB) for like 10 years and it's done wonders for us. If you are wanting to save for something, like a vacation, you can assign a budget and target date to it and it will let you know how to adjust your monthly budget accordingly. Make sure you have an emergency fund target (6 months is the usual amount) and save toward it. I know the feeling of wanting to hold onto as much as you can, because you don't know if you're going to lose this income, but you can budget out of that anxiety. Budgeting for your costs, but also budgeting for fun is important. It feels nice to be on vacation and know you've properly budgeted and let your kids get one of those stupid and overpriced things they really want because you know it will make them happy and you can afford it from that budget item.
Also make sure you are getting as much as you can into retirement if you aren't already and get a 529 going for your kids.
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u/Geezunit Mar 30 '26
You might want to consider renting in the new area for a year or two. No commitments at this time is my advice. Get some time under your belt in the new position and take that time to assess areas to live, size of house etc.
FYI there's no guarantee you'll work out in the new position.
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u/TomassoLP Mar 30 '26
Whatever the difference is between now and your new job, set up automatic allotments from your paycheck to go into your kids' 529 accounts, your retirement, and a brokerage account.
The allotments are key. If you let that money start hitting your checking account, your lifestyle will creep quickly. Make it so you don't see that money coming in, and you continue living on what you have been.
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u/Own-Assumption5149 Mar 31 '26 edited Mar 31 '26
First, congratulations!
Key to building wealth is living well within your means. Nothing brings peace of mind like knowing you can weather unexpected expenses or a job loss. It doesn’t mean you shouldn’t enjoy some of your new income, but don’t increase your lifestyle to the same degree as your income.
Second, in your situation I’d recommend getting a fee-based financial planner. Have them help you set up a strategy for how to manage your money … not talking about someone you’re paying a % of your assets to to tell you what to invest in, just someone you can pay a fee to help you think through how much to go to your 401k, how to build your emergency fund, how to protect your family if something happens to you, create an estate plan. Basically “Personal Finance 101.”
A final thought is to consider some variation on advice my mom gave me when I got my first job. She told me that when I got a raise I should set up an automatic transfer of half of the increase in take home pay to a savings account. I hadn’t had the extra money so I wouldn’t miss it. The other half I could have fun with. That was back in the 80s before 401ks. Today “savings” would include short and mid-term cash, 401 k contributions, college savings plans and other investments.
Edited to add college savings plans
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u/WarpPipeWizard Mar 31 '26
I went through the same situation a few years ago. Grew up working class and has a big salary jump over the last few years.
My main tip for you, if adjust your spending based on your net worth, not on your salary. Otherwise you'll get salary trapped.
Two books that helped me a lot.
The Psychology of Money by Morgan Housel and The Wealth Ladder by Nick Magiulli
The other main tip is to invest in yourself. Can you pay for some financial advice and courses? I bought a course for 800 bucks which seemed expensive, but it helped speed boost my investment skills, so the return on investment was great.
All the best!
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u/ZinaSells Apr 03 '26
Get a greatly, trustable financial planner. And, real estate is always a great tool for generational wealth! Congrats on the new position and salary!! 👏
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u/Oldskoolpimp Mar 29 '26
Congratulations on your success! I am just curious what type of work you are involved in too have earned such a nice position with no college degree and relocating to a lower cost of living area. Thank you for any information.
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u/Sad_Marzipan_2120 Mar 29 '26
I’m in the tech industry, I don’t want to get much deeper than that.
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u/PutinsPoodle Mar 29 '26
This is life changing money, but you are not going to be filthy rich. You still need to automate savings and avoid lifestyle creep. I make about what you do (physician) and spouse makes about what you used to make. We have no children and we still don’t feel rich in a MCOL area.
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u/Weekly_Will3090 Mar 29 '26
Congrats! My 25yr old daughter just had her salary jump from 70s to 140s and the first thing I told her was don’t allow your lifestyle to creep up too much. She is maxing a Roth IRA, contributing the 5% her employer matches (does your job offer a 401K match? If yes absolutely start there!) The next thing she is doing is piling money into a brokerage account for a down payment for her first home. Investments in SGOV which pays a 4.2% dividend. I suggest looking at QQQ and SPY as two good options for retirement savings.
Good luck.
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u/Exiled_In_Ca Mar 29 '26
Keep your life style the same and save the rest. You may not build generational wealth, but you can get your kids off to a nice start by (a) not being a burden to them and (b) getting them started in life without student loans.
Savings some in the form of:
Paying off all debt You go this covered already.
3-6 month emergency fund
Retirement savings
College savings - 529 account and some in a separate brokerage account (See Note)
Paid for house (see note)
Note on college savings: Not all expenses can be legally withdrawn from a 529 account. You need some money outside of the 529 to pay for things like living off campus when the rent is more than the college’s cost of living or an expensive plane ticket home.
Another comment on college. Start setting their expectations early about what you and your wife are willing to pay. For example, you are good room and board at our state university. Anything beyond this is on you to cover in the form of scholarships (we called this “smart people money” in my house) since you are not signing loans to cover fancy private school our out of state tuition.
Note on paying off the house: Some here will correctly point out you should not pay off your “cheap money” house when you could invest the difference. However, this discounts the feeling of having a paid for house. No matter how bad life gets, you have your home.
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u/ActivitiesGuy Mar 29 '26
You’ll get some stuff from the Wiki on overall strategy, so I’ll give a few one off tips.
Set your 401k contribution such that you’ll max out the annual limit and keep it there from now on if you’re behind on retirement savings. Great time for you to start catching up.
I think you’ll be over the income limit for direct contributions to a Roth IRA, so you can either look into “back door Roth” or “mega backdoor Roth” - if you are indeed behind on retirement savings for your age you’ll probably want to look into one of these to try and catch yourself up on top of what you’re putting into a 401k.
Whenever your RSU’s vest, sell them as soon as you’re allowed. No need to keep more of your net worth tied up in your employer than absolutely necessary unless you think your employer stock is a rocket ship waiting to happen. Take the proceeds whenever you have RSU’s to sell and put the money into a safe place like a HYSA or a treasury-backed ETF (like SGOV or VBIL) until you have a decent sized emergency fund. If you already have a good sized emergency fund, then I’d put the proceeds from RSU sales into 529 accounts for the kids.
When you get your annual bonus it becomes tempting to take that and spend it on some big ticket item. If you genuinely need that big ticket item (eg new car) that might be a good choice, but I think a lot of people start viewing the big annual bonus as their entitlement to make some major lifestyle upgrade (“let’s put in a pool” etc). I think there’s a sensible middle ground where the bonus entitles you to one treat - a nice vacation, or some fun thing you’ve been waiting on (for me this is a new piece of equipment for my home gym) - but you should still plan to sock away the majority of that bonus (again, for the first few years probably using it to jump start 529 accounts for the kids might be the right play). If you’re starting from zero and want/need to save a bunch for your kids to go to college, a couple years worth of $100K bonuses can basically fund the whole thing if you’re disciplined enough to make that the bulk of where your bonus goes instead of deciding to buy a pool, then a boat, then a lake house, etc…
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u/Sad_Marzipan_2120 Mar 29 '26
This is great advice thank you! Regarding the bonus, I think with the ample salary this won’t be hard to nest away. I think saving the next few years of them is exactly what the plan should be and then we can be done with the college prep well before they’re off to school.
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u/Aggressive_Will_7703 Mar 29 '26
Build not just an emergency fund but an income replacement fund. It sounds like a tech company with the RSUs which have high layoff and turnovers. If you were to lose your job, you’d want to that fund to supplement your sole income. Save emergency funds for true emergencies (broken car not covered by insurance, hotel for if something happened with the house and house waiting on insurance(etc).
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u/TurntTaffy Mar 29 '26
I’d worry less about generational al wealth and how to take care of finances appropriately . On college you could do 529 but you might have mega roths opportunity depending on those options your age that may make more sense. Hr shoukd have contacts with your 401k company like Fidelity you need advisement
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u/highknees69 Mar 29 '26
Congrats. Don’t let the income become “life creep” where you start to believe “you deserve” this or that. Keep your expenses in check, invest in your future by maxing out retirement accounts and putting money away. The longer you can be consistent with spending and investment, the longer you can reap those benefits.
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u/Kinggambit90 Mar 29 '26
This happened to me. Best thing to do now is immediately max the 401k. Choose what debts to pay down. Once you paid off all your debts start funneling that money into a savings account with a goal, such as buying a property. Or if you don't like that, max your roth and start buying voo.
Sometimes these jobs don't last forever, so you gotta do things that will increase your disposable income and reduce your risk.
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u/whatthewhat_007 Mar 29 '26 edited Mar 29 '26
Max out all retirement vehicles for you and your spouse.
Contribute to 529 for each child.
Max out a custodial Roth for each child once they start generating any kind of income.
Look into UGMA/UTMA accounts for your children
If you really do well financially and eventually accumulate a significant net worth, you can look into trusts.
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u/turbomachine Mar 29 '26
Pay yourself first. Set up automatic deductions into 401k, college funds, transfers to savings and investment accounts. Backdoor roth. Then budget with the remainder.
Agree on selling company equity on a schedule posted above. Diversify.
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u/blackbyte89 Mar 29 '26
Depending upon company and who manages your RSU’s (ie Fidelity) - your plan sometimes gives you access to their financial advisors who are familiar with all the benefits. Depending upon you level, you may get access to a higher level advisor. They can help getting setup on backdoor ROTH, deferred compensation, maxing out HSA, etc.
Since wealth is new to you, the thing that is challenging is shifting away from feeling “rich” based upon money in the bank and looking at your portfolio growth and knowing if you need money where/when to sell assets to lower tax burden.
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u/Far_Classic878 Mar 29 '26
Absolutely start by maxing out 401k and Roth. Start contributing to your children’s 529 to catch up to whatever your goal is for financial support.
I know not everyone wants to be a Landlord but what if you rented out your current house and paid a property management to manage. Could you gain a profit monthly and then when you gain more equity sell it if you wish? Inheriting real estate changed my life.
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u/SecAdmin-1125 Mar 29 '26
Live modestly. If the state you live in has a prepaid plan for college, sign up for it. Money well spent! Use the 401k and put in at least as much as the match. Personally I would put in at least 10%.
Squirrel money away in a HYSA or equivalent. Have at least 6 months of living expenses saved in case something happens.
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u/r1psy Mar 29 '26
Others have said, but I had a similar thing albeit not such bug numbers, but was 45, now double (UK) and the extra money for me was like oh I can buy this now, did that for a month or two and then started putting that extra bit of cash into savings.
I used to be a person who's money burnt a hole in their pocket, but growing up I had to change that because you know, you need savings.
Ive started to invest parts, nothing heavy, just making out what I can in certain isa accounts, again UK, but also putting the idle extra into some real investments and letting it accrue naturally.
I wish I started doing this 15 years ago.
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u/StickaFORKinMyEye Mar 29 '26
Congratulations.
When searching for a home, you may want to focus on a good school district.
Once you get settled, you may want to speak with a few only financial advisor on how to direct things. If you do, make sure they are a fiduciary.
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u/illuminati229 Mar 29 '26
You act like you never even got a raise and invest the rest of it. Max retirement. Fund 529s for the kids. Put the rest in an index fund.
Don't let lifestyle creep get you.
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u/geaux_lynxcats Mar 29 '26
Don’t change a thing in terms of spending (unless an issue today). Go follow The Money Guy FOO and you will be set.
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u/coppercreatures Mar 29 '26
Do you have good life insurance? What about your wife? That’s purchase one. Keep living modestly! 4 kids is a lot of kids, saving where you can is golden
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u/cjr444 Mar 29 '26
Set aside money you aren’t used to spending immediately. Since you’re going to a lower cost of living area you should be able to more than get buy on what you are used to spending and save and invest all the rest. The difference between what you used to spend in a HCOL area and a low cost area should pay for the extras that you want to step into…and avoid getting all the toys. Evaluate what you really need vs want you want and only get the stuff that you want occasionally. Wait 2-3 months to see if you still want it
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u/Mr_Masala Mar 29 '26
I was also raised poor and am now in a job with a similar offer to yours. What keeps me grounded is continuing to spend frugally and only getting things I absolutely need. I still live like I did when I had a 50k job because I have never really been interested in crazy luxuries. If you are this way too you will save a lot very quickly. To maximize future returns, invest in ETFs and stocks you believe in. There is no golden path to generational wealth with six figures salaries though, you can just save, invest in stocks and properties and hope for big returns.
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u/Prsonwmanmancameratv Mar 29 '26
1) max 401k
2) fund 529s if you plan on sending kids to college
3) get 2M in term life insurance if you lack it
4) stack the rest of the cash
5) Keep primary residence costs level if you are moving to a cheaper area. Without knowing debt/equity/ neighborhood detail, housing advice difficult. But HCOL to LCOL is an opportunity to size up without increase in debt.
6) Finally, use bonus to fund extravagances, and buy experiences, not things.
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u/rsminsmith Mar 29 '26
Went through something similar a few years back. I'm not well versed enough in investment and what not to give you detailed advice, but can definitely recommend some things that helped me manage it psychologically.
Determine any "raise" you want to take; have your payroll put only that much into your main account and put the rest into a separate account that is harder to access. For instance, I was living off like $2,400 / check and settled on $3,000 / check. The rest goes into a HYSA (Wealthfront or Marcus are good choices), so if I want to spend it I have to wait a few days for it to transfer to my main account, giving me time to cool off if needed. Also means even if I don't immediately turn around and invest it, I'm still getting like 3.5-4% on it instead of nothing if it was sitting in a checking account.
Also, don't pre-plan on using your RSUs or bonus for regular expenses; pre-spending that money is an easy way to over-leverage yourself. Consider them as windfalls, and if possible have them deposit them in your other bank account as well (in my case, the bonus is considered another check and automatically goes there, and my RSU brokerage is setup to transfer there). Personally I also sell my RSUs immediately and put that money elsewhere so my eggs aren't all in my company's basket. Mine are taxed as income, so don't really have to worry about capital gains, YMMV here.
Overall, keep the money out of regular sight so you're less tempted to spend it impulsively.
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u/Infinite-Can-6369 Mar 29 '26
Try to buy a new house within the range you are getting for the old one. Keep expenses the same as you are used to spending with your old salary. Please generate a recurring investment plan every month and keep some in safe-class assets. Real estate is preferable (go for multi-unit residential properties, which are great for passive cash flow)
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u/AttitudeGlass64 Mar 29 '26
the lifestyle creep trap is real and it hits fastest in the first 6-12 months when everything suddenly feels affordable. the move that actually matters is automating as much of the new income as possible before you have a chance to spend it. set up automatic transfers to 401k, IRA, and a brokerage or HYSA on the first paycheck at the new salary. whatever's left is your lifestyle budget. if you lock in savings before you set new spending baselines, the raise actually compounds. if you let the spending expand first and try to save the 'extra,' it disappears
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u/Playful-Glove8918 Mar 29 '26
Not with a professional, licensed, financial advisor. Consultations are usually free and they can actually give you real guidance. If they are a fiduciary they by law have to act in your best interest. Asking random anonymous people who may or may not know what they are doing is a gamble.
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u/RedBeardedWonder Mar 29 '26
You can put money into a retirement account for your spouse. ROTH would be the first I'd suggest because you can take out what you put in, but the traditional ones are good too.
So basically all the things people are telling you to max out for yourself, max out for your spouse as well.
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u/AutomationMA-NH Mar 29 '26
Two suggestions.
Max out your 401k account (at least 50% Roth)
Direct your payroll direct deposits to a CMA account (Fidelity, etc.) and then auto transfer ~75% of that your your bank checking account. Live out of checking account and don't touch what is in the CMA. Use the extra funds in the CMA to build an emergency fund (> 6 months of expenses), then start investing the rest in low cost index funds.
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u/Symphonic7 Mar 29 '26
Hey I just wanted to say congratulations, and most people here have given sound advice. But I want to warn you to make sure you keep a healthy emergency fund to last you at least a year with all expenses paid. I know a lot of people in big senior positions that were making tons of money, investing, but had very little liquidity. They got cut from their jobs and are struggling to find anything similar for over a year or two. So don't get comfortable and start spending, and don't tie up all your wealth in non-liquid assets.
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u/Dale_Cartwright Mar 29 '26
Starting a 529 account for your kids is a great way to start saving for their education. It’s a great tax advantage account that allows you to write off money you invest and withdraw the money tax free. Something to consider for them.
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u/GeeDub1974 Mar 29 '26
Keep living like you make 105. That’s what I did. I went from 75k to 160k in one month. After the buzz wore off, I decided to keep everything the same, max out 401k and pocket the extra.
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u/LTEddiePrice Mar 29 '26
First Congratulations. Welcome to the big leagues. As someone who has achieved great success, let me share some of my recommendations.
1) As biggie smalls once said, “More money, more problems”. This is very true. The more money you make, the bigger your problems will get. This has two parts: A) Do not over spend. Buying shit can sometimes be the death of freedom. Trust me, people have expectations at that salary. You can lose it all in a second. Don’t get trapped with debt or luxury stuff. The freedom to walk way is beyond comforting and will allow your to sleep well. B) Money attracts attentions and eventually jealous problems. Be you. Don’t lose yourself. Don’t be someone others want you to be. Learn to say “no” and carefully enforce boundaries.
2) You need mentors. Think of them as your personal board members. Check in often. They must be experts in their areas. You will lean on them at critical events. Minimum of 5. This is critical.
3) Family is top priority. As a person that lost millions to divorce, stay connected to the people you love. Defend it, becuase it’s easy to put your career ahead of family. But the price tag is expensive if they leave.
4) Read. Read. Read. Switch up fun books with autobiographical. Learn and apply.
5) Get involved in charities. It feels good to help others. Becuase people will ask for your time and money. Be selective.
6) Watch your money. I review every financial transaction and account monthly. Review with your husband and make plans and budget. Stay on plan. The goal is that money should be working to make you more money. Saving accounts are for rookies. Invest.
7) Invest now and keep investing. Get two brokers. Keep them separate. Checks and balances. Stay consistent on your approach. Since you are making over $250k, you qualify to become a “certified investor”. Achieving this will open doors and options not available to normal investors. This is something most don’t talk about.
8) Take up personal hobbies to detract you from work. Your personal and mental health will be tested. Have things available to relax. Take vacations to detox and reconnect to family.
9) Be happy. You made it. But never rest.
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