Top 10 Highest Paying Jobs

At compounding returns, we frequently focus on what to do with your current income. We focus on living within your means, paying off debt, saving and investing as the building blocks to increasing your long term financial health and net worth. We firmly believe that financial well being is not entirely dependent upon your current income. On the other hand, it's a heck of a lot easier to save for the future when you are earning $200K a year than when you are earning $20K a year.

For those who may be just starting out or considering a career change, it may be worthwhile to take note of the top 10 highest paying jobs in America, as revealed by BLS Statistics reported by MSN Money in 2010. This list should give you an idea of what careers paid the best and had the best benefits in 2010.

The clear winner was, no surprise: Physicians. Doctors in all specialties dominate the top 10 highest paid professions every year earning an average of $186,000 annually for physicians in primary care and $340,000 for doctors in higher paying specialties such as surgery. If you are interested in becoming a MD or DO, chances are good that you will earn a great deal more than your non-physician friends and neighbors.

No big surprise there. Doctors get paid a lot. With that said I will ignore the earnings of physicians in the rest of this post, and focus on the top 10 highest paying non-medical jobs.

1. CEO's: Chief Executive Officers are the highest paid non-medical profession, raking in an average of $160,000 a year, although many CEOs are paid a great deal more than this. If you want to become a CEO, you will need two legs to stand on: education and experience. Many CEOs either founded their current company or worked their way up from within. Usually these men and women are highly educated, hard working, and have a great deal of experience in their field. An MBA from an Ivy League school doesn't hurt either.
2. Lawyers: Litigators also made a competitive salary in 2010, averaging $124,000 annually. Becoming a lawyer requires a four year undergraduate degree, gaining admission to law school by taking the LSAT and competing against your peers for admission, completing the 3 year course of legal study, and passing the State Bar Exam. Whew... After 7+ years of training, the earnings better be good.
3. Natural Science Managers: Natural Science Managers earned an average of $123,000 a year last year, putting them in the number 3 position. Getting a job as a natural science manager requires being highly educated in a physical science specialty at the university level, as well as years of laboratory experience.
4. Engineering Managers: Engineering managers made approximately $121,000 a year in 2010. Engineering managers supervise the engineering process throughout the design and completion of engineering projects. A bachelor's degree in an engineering discipline from an ABET accredited institution is very important, and higher education in project management as well as experience in your field are viewed very favorably.
5. Airline Pilots, Copilots, and Flight Engineers: Pilots, copilots and flight engineers made approximately $120,000 a year in 2010. This amount varies greatly based on experience, years of flight time at your current airline, and how the greater economy is faring. Though pilots at the major airlines earn an excellent living wage, the job security is at times fleeting, as the airlines are extremely cyclical. Requirements for entry into this profession are the minimum of a commercial pilots license with multi-engine and instrument ratings, although each airline has established individual minimums for hiring new first officers. 
6. Petroleum Engineers: Petroleum engineers made about $119,000 a year in 2010. Like any engineering job, entry into this lucrative profession requires the minimum of a bachelors degree in an engineering discipline from an ABET accredited university.
7. Computer and Information Systems Managers: Computer gurus are receiving a fairly fat paycheck these days, as well, raking in $118,000 a year in 2010. Interestingly, these jobs are often held by individuals who may not have formal education, but rather have an excellent working knowledge of information systems and programming. 
8. Marketing Managers: Averaging $118,000 a year, marketing managers are responsible for ad campaigns, social media outreach, and other product placement and advertising. Many are educated in business, marketing or communication, although these are not technically prerequisites for the job.
9. Financial Managers: Financial managers did pretty well managing your (and my) money last year, taking home an average of $110,000 annually. Financial management jobs normally require a quantitative education in business, economics or finance and many financial managers have earned their MBAs.
10. Sales Managers: Sales managers also took home approximately $110,000 a year in 2010. Although some are educated in management and business, others are promoted from within the company that they started at the ground floor. This is another field where they barrier to entry can be fairly low while the financial rewards are enticing. 

So if you are in the market for a new career, and don't see yourself wearing a lab coat and being called "Doctor", now you have a list of some alternatives in your quest for a fatter paycheck. 

Be aware that many of these career paths come with significant education costs that would require you to take on additional training costs and/or student loans. Always weigh the potential rewards against what the training will cost you when considering a new career, and seek to reduce the costs. See our article on 10 great online colleges for more ideas on how to get the education you need without breaking the bank.

Photo By: AMagill

A Guide to Paying Off Credit Card Debt

The average household credit card debt per US household is $14,750, according to CreditCards.com, and American consumers held 609 million credit cards in 2010, with the average American cardholder having more than 3 credit cards, with an average APR of 14.73%.

Ouch. If you find yourself in a financial situation like that described above, owing a great deal of money on credit cards with an interest rate above 10%, juggling debt, making minimum payments, and progressively climbing further into debt, with interest and penalties costing you more and more every month, you are not alone.

If you are carrying debt on one or more credit cards, you are making the credit card company rich, while keeping yourself in debt. You know its time to break the cycle, but starting the process of getting out of debt permanently is a difficult process that requires a great deal of mental and emotional fortitude. But you can live debt free. For an excellent resource explaining many of the steps below in greater detail, try reading The Total Money Makeover: A Proven Plan for Financial Fitness, by Dave Ramsey.

Your Step by Step Guide to Paying Off your Credit Cards:

Make the decision. The first and most important step in paying off your debt, is to make a long term commitment to yourself, your family, and your future. This must be an all encompassing lifestyle change, in which your entire family needs to be involved. In the beginning, it will hurt, as you and your family adjust to living within your means. But take heart that it will hurt more in the beginning, and that if you can stick with the plan, you will be happier, richer and more fulfilled as time goes by.

Stop using credit cards. This is going to be tough, especially if you do not have a working budget. Take your credit cards and hide them. Give them to a relative, lock them in your safe deposit box, or have a friend hide them in your house.

Build a budget. If you don't already have a budget, you need one. There are numerous easy ways to start a working budget. Possibly the easiest and most sustainable is to use the "cans" method. Find a coffee can, and label it with a budget category. At the beginning of the week, put a predetermined amount of cash in the can. That is your weekly budget. When the money runs out, you can no longer spend on that category.

Know what you owe. Take stock of your outstanding debt, and order the debt from smallest to largest amount in a spreadsheet, on a piece of paper, or whatever you have handy. Since you have already stopped using credit cards, the sum of these accounts is now your owed principle.

Call your creditors. Call your creditors and request lower interest rates on existing balances. They may or may not accept your request. Usually, threatening to transfer your balance to a card with a lower interest rate may bring about a decreased interest rate from your card company. If this technique still doesn't work, you may want to shop around for a card and actually transfer the balance on your highest interest debt.

Pay the minimums while you fund your emergency account. Build up your emergency fund (in a high interest online savings account like ING Direct), while making the minimum payments on your outstanding debt. This step will be painful as you will now see the effects of interest payments on your outstanding debt, but it is imperative to long term financial health to have an emergency fund.

Keep in mind, if you don't have an emergency fund, all it takes is one setback to put you back on the debt treadmill. Once your emergency fund reaches your determined threshold ($1000 is a good starting point at first), you will be ready to begin paying off your debts one by one.

Start paying off your debt. While making the minimum payments on all of your accounts, choose the account with the lowest balance. After looking at your household budget, apply the maximum amount of available money to repaying this account. You will continue to do this every month until the first account is paid off.

Begin snowballing your debt. Once your first account is paid off, you will take the payment you have been applying to the first account, and steamroll it right into the account with the second highest balance.

Repeat the process. Continue this process, focusing on one account at a time, working from the smallest account to the largest. Be patient, stick with the plan, stay within your budget and this debt elimination strategy will work in your life.

This strategy is a very watered down version of what you will find in The Total Money Makeover: A Proven Plan for Financial Fitness, by Dave Ramsey. Ramsey certainly believes this to be the best way for average Americans to begin to break the bonds of credit slavery and offers a program with wonderful psychological rewards as you begin to see results immediately (which is why we start with the smallest balance, and not the card with the highest interest rate).

Getting out of debt is the first step in building a secure financial future. You will never get rich by paying someone else 15% or 20% per year, which is why getting out of debt is priority number one in your financial life. Paying off debt also offers the single best return possible inside or outside of the financial markets. No mutual fund or hedge fund manager could guarantee you a 20% annual return, but a 20% return is absolutely what you will get by paying off your high interest credit debt.

Dividend Investing Resources for the Little Guy

There are as many stock investing philosophies in the world as there are individual investors. There are also thousands of people who make money by investing in high risk, potentially high reward trading techniques: exercising options, buying on margin, and other so called "advanced" trading behaviors. Although it is possible to make a great deal of money using these types of investing strategies, at compounding returns, we feel that for the average investor, this is likely a losing game.

The cards are stacked against the little guy by hedge funds and high frequency trading computers that can have huge impacts on stock prices and the ability of any investor to time the market. Because of this, we believe that the best way for the average investor to build wealth in the stock market is through purchasing shares in growing, long term companies that pay a consistently increasing dividend.

For those investors looking for an excellent book on dividend growth investing, look no further than The Single Best Investment: Creating Wealth with Dividend Growth by Lowell Miller. In addition to books, however, there are numerous online resources available to individual investors who are looking for excellent long term, dividend paying securities. These consist of both free, and paid services. Some of our favorite online resources here at compounding returns include:

The Motley Fool: An excellent resource for beginning investors as well as seasoned pros. We really like this site because it not only provides an investing education, but also a community of investors to bounce ideas off of and discuss different stock picking strategies.

Dividend.com: A great place to view the historical dividend payouts for any stock ticker. This is a great way to screen potential investments and judge the management's past dividend increases or cuts.

Top Dividend Stocks: A subscription site for dividend investors. Though it costs money, it provides a very valuable service to long term dividend investors, and stands at the top of the pack for paid sites.

Investing in dividend paying stocks is not a get rich quick strategy. It is a long term commitment to your financial future. Hopefully, some of the resources above will help educate you about how to best choose long term dividend stocks.

Personal Finance for Military Members

As a military officer, I often find myself bringing up the topic of personal finance with fellow officers as well as senior and junior enlisted members. I have found, throughout my military career, that many military members, like their civilian counterparts, are uneducated about personal finance topics. As a nation, we owe our Soldiers, Sailors, Airmen, Marines, and Coast Guardsmen better training and financial management resources. 

Our military is put into financial waters that most Americans will never have to navigate (including frequent moves, hazardous and frequent deployments, and living separate from family and friends.) All too often, military members are left to choose their own path in difficult and confusing financial situations. This is made much worse by often predatory financial institutions and organizations who prey upon military members because of their youth, lack of financial education, steady pay, and UCMJ as well as non-judicial penalties for defaulting on debt and other recurring payments.

Military members are struggling financially. Visit this link for information on the Military Debt Problem, as revealed by a recent FINRA study. The results were both eye-opening, and unfortunately, not surprising. Military families are struggling financially, despite steady pay and a number of benefits that could help military members and families establish themselves on strong financial footing. 

The FINRA study reveals some negatives about the financial status of military members:

Military families are heavily in debt to credit card issuers, with more than 25% of respondents owing more than 10,000$ to one or more credit card companies. 

25% of military service members have overdrawn their checking accounts, often incurring significant penalties.

21% of military service-members have used high-cost non-bank borrowing such as payday or auto title loans in the past 5 years.

More than 50% of enlisted personnel (including NCOs) have reported making the minimum payments on their credit cards in some months.

Only 50% of military personnel have a rainy day or emergency fund.

But the FINRA study also revealed some positive financial traits of military members:

Military members are better about keeping up with monthly expenses, calculating retirement needs, shopping around for financial products and checking their credit scores and reports for errors. 

For those of us who serve, this should reveal a great deal about where our fellow military members are financially compared to where we would like our service men and women to be in the grand scheme of things. 

The wages in the military are low, especially for junior enlisted members. Frequently, however, military members are placed into boom and bust scenarios, much more than other parts of society. This is due to numerous factors including decreased spending and increased (tax free) earnings during deployments, or incentive programs such as reenlistment bonuses and other financial incentives to service members. 

All too often, a service member will return from a deployment or receive a large bonus or incentive, and immediately spend the money on consumer goods. In some cases, the member will make the situation worse by choosing financing options or revolving debt payments that they do not fully understand. When the cash runs out, the member may turn to other risky financing options to keep out of trouble with their command cadre. 

There is a reason that when you drive off of a major military installation, the businesses that tend to establish themselves along the road are payday lenders, pawn shops, and title loan institutions sprinkled in with the tattoo parlors, laundromats, and barber shops. The risky and predatory financial institutions prey on military members because of their steady income, lack of financial savvy, and the ability for the military to dock their pay if the members over-extend themselves financially.

Financial education is the first step in overcoming the youthful mistakes and predatory institutions that can financially cripple our young military members.

Though it can be very difficult to get ahead in the beginning, the best thing for military members, especially junior enlisted members to do, is to live within their means.

Keep in mind, the same traditional financial rules apply, whether or not you wear fatigues to work. The keys to financial independence are still to spend less than you make, and save for the future.

Grace Groner and Long Term Stock Investing

Grace Groner passed away in 2010 with a stock portfolio worth more than $7,000,000. Having lived through the great depression, the frugal woman graduated from Lake Forest College, and following graduation, began working for Abbott Labs, where she worked as a secretary for 43 years.

Grace Groner's investing success and her ability to amass a fortune of over $7,000,000 came from a $180.00 stock purchase which she made in 1935, when she purchased 3 specially issued shares of Abbott Labs (her employer's stock). Over the course of the next 75 years, Abbott Labs would grow into one of the most successful and well known pharmaceutical companies in the world, while Grace Groner quietly held her shares, allowing the magic of compounding returns, stock splits, and capital appreciation to turn her into a multi-millionaire.

At compounding returns, we will never advocate putting all of your investing eggs in one basket, indeed, diversification is the cheapest and only insurance policy that we have when investing in the stock market. But Grace Groner's story provides an indelible and priceless lesson about the greatest way to build wealth in the stock market.

Over the long term, purchasing stock in growing corporations that serve an important, long term need within the national and international marketplace while paying an increasing dividend will result in building true wealth. I ran the numbers, and Grace Groner's initial investment of $180.00 in Abbott Labs in 1935 returned an average of 15% over the 75 years that she held stock in the corporation prior to her death.

Are 15% average long term returns something that the rest of us can count on? No, probably not, but this should not keep us from embracing dividend growth stocks early in our investing careers as a long term, wealth building strategy.

Eating Out on a Budget

In the quest to save money, build savings, and reduce lifestyle costs the first thing many people eliminate from their budgets is eating out in restaurants. For many people, this is a great way to cut down on monthly expenses and help get our budgets under control. But sometimes a special occasion or circumstance arises, and its time to take the family and/or friends out to dinner. Read on for some creative ways to reduce the expenses of your next meal out!

Coupons and Groupon. Many restaurants will issue coupons on their websites or in local newspapers and magazines in order to entice diners to a promotional event or increase the number of customers on certain days of the week. These can save you a good amount of money. In addition, Groupon offers discounts on all kinds of events, restaurants, and services and could save you 50-90% off on your next meal out. 

Kids eat free. A number of restaurants offer free meals to children. If you can take advantage of these offers, you can save a bundle on your bill. Visit Frugal Living for a list of these offers. 

Try new restaurants. In keeping with our discount theme many restaurants will offer special pricing or discounts after they open to entice new customers. Paying attention to new restaurants being built or advertised in your area can result in some excellent deals, and great meals.

Stick to salads or appetizers. Many restaurants make salads and appetizers large enough to satisfy a moderate appetite. If you can stick to a salad or appetizer as your entree you will save a bundle, especially during a business lunch or informal dinner. 

Split entrees. Want an easy way to cut your bill in half? Split an entree with your spouse or significant other. Most restaurants will even bring it out on two plates for you upon request, and with the portion sizes being what they are, chances are you won't go hungry. 

Skip appetizers or deserts. If you are looking to stretch the evening out, consider serving appetizers or deserts at home, prior to and following the restaurant meal. This not only adds a personal touch to entertaining, and keeps you from having to clean up after a full meal, but will save you a great deal at the restaurant. 

Skip the booze, or bring your own. Most restaurants make almost all of their profits from beverage sales, because the markup is so extreme. Skipping the booze can save you a great deal of money. If you are looking to celebrate, many restaurants will allow you to bring your own bottle of wine or alcohol, and charge you a corkage fee, which will vary. Just make sure you call ahead and ask if they allow you to bring your own alcohol before rolling into Applebee's with a handle of Jack Daniel's. 

If you are celebrating a birthday or other event, let the restaurant know. Who doesn't like a free desert. If its your birthday or a special occasion, many restaurants will provide you with a free desert, but only if they know about it. 

10 Ways to Stash More Cash

1. Start a budget. Over 60 percent of American families do not have a working budget, according to a recent survey by the National Foundation for Credit Counseling. Budgeting has been shown to help people spend less, save more, and incur less debt. With the advent of online budgeting sites like Mint.com making it easier to start and maintain a household budget, there has never been a better time to start living below your means!

2. Cut some big stuff. Sure, the daily lattés can add up, but 2011 might be a great time to make some more significant cuts in spending. Take a look at your monthly budget, focusing especially hard on the big ticket, recurring expenses and get creative. Single? Consider a roommate. Married? Maybe you could get by as a one car family. Making some big cuts could prevent you from having to make a lot of little ones.

3. Sweat the small stuff. Every little bit counts. No one said you have to live like a monk, but setting a monthly maximum for things like coffee, entertainment, and shopping can help prevent blowing your budget.

4. Pay down debt. Making debt elimination a priority offers the single best return on investment inside or outside of the financial markets. With average credit card interest rates standing at 16.74%, it is clear that the sooner you pay off your creditors, the more cash you can pocket in the long run.

5. Focus on your 401K. The 401K savings plan is Americans’ primary investment vehicle for a reason. Not only does the 401K offer tax deferred savings, but many employers will match your contributions up to a certain percentage of your salary. If you aren’t contributing up to the employer match, you are turning down free money.

6. Be smart about taxes. Do your best to shelter your savings from Uncle Sam. Your 401K should be your first stop, especially if your employer offers matching funds. You can invest up to $16,500 in 2011 (Add $5,500 to that limit if you are age 50 or older).

Want to invest more? Consider a Roth IRA. If you are single and earning less than $107,000, or married and earning less than $169,000 (filing jointly), you can contribute up to $5,000 after taxes. Withdrawals from a Roth IRA are absolutely tax free in retirement.

Still have money to invest? Congressional legislation has made dividend paying equities an attractive investment, by keeping the capital gains and dividend income tax rates low through 2012.

7. Pay yourself first. Research has shown that the most effective way to increase our personal savings rate is to act like we make less than we do. After paying your bills, pay yourself. Setting aside money for the future should be considered a non negotiable expense. Setting up recurring monthly transfers into a savings account, retirement account, or brokerage account is a great way to automate your savings and pay yourself first.

8. Get a raise. Many businesses and corporations have been hoarding cash and slashing expenses throughout the recession of 2008-2010. As the economy begins to recover, loyal employees will be in an excellent position to request wage increases.

9. Consider a second job. Let’s face facts. Everyday expenses like gas, groceries and consumer products are getting more expensive by the day. For some, our primary job just might not be cutting it anymore. A part time job may bring in just enough money to help save for a special purchase, pay down debt, or invest in the financial markets.

10. Discover your inner entrepreneur. Most of the wealthiest Americans are business owners and entrepreneurs. Most of these ventures started out as a hobby or side hustle. 2011 might be just the time to embrace your entrepreneurial spirit. Consider making some extra cash doing something in your specialty on a part time basis. Who knows, this could blossom into a successful business venture.

Stocks, Fixed Income Assets, and Inflation

During the market downturn of 2008 to 2009, many investors who were burned by the huge losses in their stock portfolios, abandoned the equity market for "safer" investments such as cash and bonds, choosing a small but guaranteed annual return rather than the unpredictable and nerve wracking returns of the stock market. But those who stuck it out through the recession in stocks have since recouped most, if not all of their losses from the initial market downturn, as those who shifted to more conservative investments have been unable to regain their lost capital.

Asset allocation is an extremely important consideration in financial planning. Bonds and cash assets are an integral part of any well allocated portfolio, and depending on your age and need for capital growth, should make up a large part of your portfolio. But, maintaining most or all of your investment portfolio in cash and bonds may actually result in the investor losing money, despite the guaranteed annual returns.

It may not feel like you are losing money, as interest is deposited into your account, but when you factor in inflation, which has historically averaged 3% per year, it becomes painfully obvious that maintaining investments in fixed income assets will not only prevent the investor from growing their nest egg, but will in fact slowly erode the real buying power of your portfolio. 

By choosing to be risk adverse in the short term, investors are taking on the biggest risk of all. Getting to retirement without adequate financial resources to fund a comfortable lifestyle, or worse, never being able to retire in the first place. 

Although stocks are risky in the short term, over the past 200 years, evidence reported by Dr. Jeremy Siegel in Stocks for the Long Run, 4th Edition: The Definitive Guide to Financial Market Returns & Long Term Investment Strategiesproves that stocks have historically averaged 10% annual returns before factoring inflation, and 7% annually after factoring for inflation. 

It is important to understand that stocks will have periods of boom and bust. Some years and decades stocks will soar 20% per year, other years the market will crash 50% or more and fail to rebound for a very long time. This makes a portfolio heavily invested in stocks extremely dangerous for those who are close to retirement. Due to the risks of inflation, however, investing in the stock market is absolutely essential to long term investing success. There are numerous resources for determining the proper allocation of stocks and bonds for your portfolio, and only you truly know your personal risk tolerance and long term investing goals, but in investing, often times the biggest thing you should fear are the detrimental effects of inflation.

If you want to get back into the market, consider choosing a target date fund. These types of funds slowly ramp down risk for investors as they near retirement, preventing the most grievous asset allocation errors that can slowly erode the buying power of your portfolio.

How to Handle a Raise

Getting a raise or promotion is a great thing. The additional income can help with many of the day to day financial struggles that we contend with. But, when many people receive a raise or promotion, they mismanage the additional income by taking on new debt or expenses, attempting to upgrade their standard of living by taking on additional revolving debt or monthly payments.

At compounding returns, we believe the smartest thing you can do with a pay increase is to pretend you never received it. This is absolutely counter to what many people, who run out and try to spend the additional income as soon as possible, do. But pretending you never received this pay increase will help you set a course for financial independence.

Living as if you have not received a pay increase requires that you have a working monthly budget. This will allow you to track expenses and ensure you are maintaining the same standard of living. If you haven't developed a monthly budget, try Mint.com for an easy to use online budgeting tool that automatically tracks your expenses by category.

Keep in mind, this plan only works if your current standard of living is sustainable, meaning your home and family are safe, well fed and secure, and you are not in dire need of immediate change. So, for those of us who fall into this category, what are the best things you can do with a salary increase? Here are some ideas, in no particular order:

Pay off credit card debt: A salary increase is a great opportunity to increase the payment you are applying to your debt repayment strategy. Dave Ramsey's book The Total Money Makeover: A Proven Plan for Financial Fitness, advocates the use of a debt snowball. Using this salary increase to bolster the payment amounts applied to your debt snowball will result in paying off debt at a much faster pace, and is an excellent use of your additional income.

Build up your emergency fund: If you have not yet funded, or still need to save additional money in your emergency fund, another good strategy for your raise could be diverting the balance of your salary increase into your easily accessible online savings account, such as ING Direct. Seek to grow the balance of this account to the next incremental level.

Invest in needed maintenance/ repairs to your possessions: The only thing worse than paying for expensive car repairs is buying a new car because you neglected to pay for the intermittent mechanical malfunctions associated with automobile ownership. If you have been putting off home or auto maintenance, medical appointments, or any other expenses because you couldn't afford them, a raise might just give you the boost you need to afford these preventive maintenance measures, and save yourself a bundle down the road. 

Make savings automatic: With the advent of online banking came a remarkable ability to make savings completely automatic. This is a highly recommended way to put your savings on autopilot and ensure that you are contributing to your interim goals and retirement without having to remind yourself every month. We recommend saving as much of your pay increase as possible by setting up automatic transfers into a high yield savings account at the beginning of each pay period, before you take money out for discretionary expenses.

Increase 401K contributions to lower your tax bracket: If you earned a significant raise, congratulations! One of the best things you can do, if you find yourself bumped up into a higher tax bracket is contribute as much as possible to your 401K account. This can both lower your taxable income, and set you up well for retirement when your income will likely be less. In 2011 you can contribute up to $16,500 to your 401K if you are under 50, and $22,000 if you are over 50. 

Increase Roth IRA contributions: If you fall under the income limits for Roth IRA contributions and are not contributing the maximum allowed amount, you are missing out on an excellent opportunity for tax sheltered savings. You can contribute up to $5,000 dollars of after tax income annually to a Roth IRA. When you withdraw the income after age 59 1/2 all of the withdrawals are tax free. Please visit www.irs.gov for more information, including income limits. 

Start itemized savings accounts: Got big plans or a big purchase on the horizon? Start itemized savings accounts for these purposes. Nothing feels better than saving for a vacation, new luxury item, new car, or other large expense and being able to pay cash for it, knowing that you are being financially responsible even when you splurge!

Start a 529 plan for your kids: 529 plans offer an excellent opportunity to shelter your kids' or your own educational savings account from the tax man. Look into this option if you have plans for future education for yourself, your children or grandchildren. Being able to pay for advanced education without going into debt is the single greatest thing you can do for yourself and your progeny. 

Spend some of it: What is life without a little fun here and there? Just be responsible. Save the money in an itemized savings account or otherwise budget for the purchase, and enjoy the fruits of your labor. 

Congratulations on your raise or promotion. Hopefully, this list will help you responsibly enjoy the extra cash that you have worked so hard for while being responsible with the additional funds.