Well, first off, maybe purchase yourself a one-time item that is not that terribly expensive. This helps to get the urge to spend out of your system and also helps to commemorate your achievement, i.e., the reason of your bonus or pay raise. It sounds kind of silly, but I used to purchase a painting or something that I needed for my office to make it more comfortable, e.g., a couch. You spend eight hours a day there, so you might as well enjoy it :-).

Once you’ve gotten that out of your system, it’s time to really decide what to do with the bulk of your windfall. Initially, it is very important to sock away 80% or more of this additional income. Don’t let the additional income lead to lifestyle creep, as can easily happen. Once you’ve cleared this hurdle, you can begin considering the following options:

• If you don’t have an emergency fund, start one, now! (try to set aside at least 6-12 months of household expenses in a savings account);

• Pay off any outstanding debts - focus on high interest debt first and move your way down til you are debt free; or

• Open or contribute to an IRA or a Taxable Investment Account - the earlier you start saving for retirement, the harder your money will work for you (noting compound interest is your friend).

If you have questions about how to best utilize your bonus or new pay raise, please feel free to contact Intelligent Investing at www.mynmfp.com/new-clients.