Summary: Options for a salary bump include investing, saving, or spending - choose wisely for wealth-building.

From Yahoo Finance: 2025-05-25 14:01:00

Congratulations on your recent salary bump! While increasing your salary is key to financial success, what you do with the extra income is just as important. You have three choices: invest it, save it, or spend it.

Investing is the best option for building long-term wealth, with the S&P 500 averaging a 10% return annually. Compound interest can double your money every seven years.

Consider investing any “found” money, like tax refunds or bonuses, to boost long-term wealth without spending out of pocket.

While investing offers high returns, sometimes putting a salary increase in a savings account is a safe option. These accounts are easily accessible and FDIC insured up to $250,000.

Online high-yield savings accounts offer competitive interest rates with no fees or minimums, making them a solid choice for storing extra money.

Spending the extra money you earn can make sense in certain situations, like paying off high-rate credit card debt or catching up on important expenses.

However, if you’re just planning to splurge on discretionary items, you may fall into the trap of lifestyle creep and hinder your long-term financial goals.

Ultimately, how you use your extra income can impact your financial future. Consider your options wisely to maximize your wealth-building potential.



Read more at Yahoo Finance: What To Do with a Salary Bump: Invest, Save, or Spend?