Before we dive in, a quick note about a resource we genuinely recommend: Advisor.com. If you’re not sure what your “next step” with money should be, their super short quiz can match you with a vetted advisor for a free call — and they work on a flat-fee model, not commissions. Dozens of TFD community members already use and trust them, and it’s a great low-lift way to get personalized guidance without the usual pressure.
By Holly Trantham
We’re in one of my absolute favorite times of year, and I’m not just talking about the incoming cherry blossoms here in New York: it’s that spring-cleaning, tax-season, post-New-Year-rush, pre-big-summer-plans time of year. During this time of year, it always feels more accessible to make big plans or big changes, especially now that you might have a clearer view of what’s ahead than you did back in January. And right around now, when we get our tax refund and have a few major financial decisions to make, I always consider what’s next.
Of course, personal finance “next steps” vary from person to person. Today, we’re going to focus on two main groups: those on either side of the six-figure dividing line. Of course, there’s nothing particularly magical about making $100,000 — that kind of salary could get you quite far in certain rural areas, yet still feel solidly middle class in major, expensive cities like San Francisco (especially for multi-person households). You could also be earning significantly less, but still have substantial savings that put you in the net worth range of people earning a lot more than you. On the flip side, plenty of people earn over six figures but still live paycheck to paycheck, as general personal finance media loves to highlight.
Today, we’re going to focus on what to do if your income (or net worth) is over $100K.
Think of this as your finance 201 lesson: for people who are already saving and investing, but want to be smarter and more strategic with their money. Once you have more at your disposal, you have the financial capacity to focus on optimizing investments, leveraging passive income, evaluating real estate, achieving financial independence, and mastering your emotions around money.
Step 1: Optimize Your Investment Strategy
We always focus on the importance of increasing income — not because we want to encourage earning more just for the sake of it, but because this gives you more room to save for the long term while still enjoying your life in the present. And when you have more to work with, you can also afford to be more strategic.
Of course, once you are past a certain income and net worth level, it often makes sense to speak with a financial advisor. We always recommend our friends at Advisor.com, particularly because of their flat-fee model: instead of working for commissions (AKA making money off of selling you specific financial products), they simply charge one flat, annual fee to manage your finances — meaning they’re actually working in your best interest. And while there is plenty you can do to improve your finances on your own, guidance from a neutral third party with vast financial planning experience can be a game-changer. Be sure to use our link and schedule a free consultation if you’re ready to take the next step!
And whether you are working with an advisor or DIYing your financial strategy, here are the next steps anyone with more financial wiggle room should consider:
1. Start off with your tax-advantaged accounts, like your 401k/403b or IRA.
Max out your 401(k) or IRA contributions if possible (the 2026 limits are $24,500 for 401k, $7,500 for IRAs — or more if you are over 50!). If you can’t max out yet, a good idea is to try increasing your contributions by 1% every few months until you work your way there.
Next, explore other tax-advantaged options. For instance, if you have already maxed out your 401k, remember you can still open an IRA — a fantastic next step to work towards maxing out! A SEP IRA is also an option if you have self-employed income (even side income)
Look into HSA/FSA options to save for healthcare. HSAs can be especially great, because even if you never use all of the money for healthcare costs, you can pull from them after age 65 for any reason, without penalty.
If you have a kid, you may want to consider setting up a 529 plan for their future education costs, as well as other, unfortunately named accounts (definitely something worth asking a financial professional about, since these accounts are so new and may or may not be the right option for your family).
For high earners, there’s also something referred to as a “Backdoor” Roth IRA. This is essentially a workaround for those who technically earn too much to contribute to a Roth IRA and reap the long-term tax benefits, and yes, it is kind of upsetting that it is a loophole for the already wealthy — but that doesn’t mean you personally shouldn’t take advantage.
2. Explore taxable brokerage accounts
As always, investing early and often is the key — so it pays to be consistent with your contributions and reinvest dividends. You should be able to set this up as the automatic default through your brokerage account.
It’s still worth noting some basic finance advice, even at higher incomes/net worths: do not try to time the market! Consistent investing over time is going to allow you to capture the market’s best days — that goes for both your tax-advantaged and taxable accounts. If you have trouble taking the emotion out of your financial decisions, working with a financial advisor can absolutely help!
Finally, continue to adjust your strategy and asset allocation based on your goals and timeline. This is a key investing principle: match your risk to your time horizon. There are different opinions from experts, but generally:
Short-term goals (anything under 5 years) should generally be kept in cash, or cash-equivalent accounts, like CDs. (Yes, even your emergency fund at this level!) Remember that the more assets you have, the more you may need to keep in an emergency fund — especially if you own a home and need to be able to cover repairs at any time.
Medium-term goals (5–9 years) can have a cautious mix of illiquid and liquid assets.
Long-term (10+ years, like your retirement unless you are very lucky) can typically handle a higher level of risk, AKA more stock allocation.
Again, this is definitely something a financial advisor can work with you to figure out, based on what your goals are.
3. Leverage your passive income.
This is too big of a topic to dive deeply into in one newsletter. But generally, the point of passive income is to get you closer to a place of financial independence — even if you don’t want to retire early. Passive income can also help cover the cost of large expenses without actively saving from your paycheck, like taking care of aging parents, buying a second home or paying for your kids’ school.
You can determine when it makes sense to sell off taxable, non-retirement investments in order to fund another goal; this is, once again, something to consult a financial professional about. They will be able to help you navigate the tax implications of selling an investment, especially avoiding capital gains tax — or you can research this on your own
Real estate (rentals, vacation properties) can technically generate passive income, but they often require more hands-on management. Real estate also has a lot more associated costs than simply investing in the stock market, from closing costs to property taxes to maintenance and property management fees. Some things to consider:
Do your research before jumping into real estate as an investment; if anything, know that it is likely a very long-term investment rather than an immediate gains opportunity.
Be cautious with real estate debt & equity! Just because a bank approves a big mortgage doesn’t mean you should take it — you could likely be approved on a mortgage that far exceeds what you should spend. Also, HELOCs/home equity loans are typically risky, unless used sparingly and strategically — do a ton of research and consult professional help before deciding to go this root,
4. Create your detailed financial independence plan.
First off, start actively visualizing: define your retirement lifestyle, so you have a goal to work towards. Then, start putting numbers to those visuals; how much will it cost to live where you want to? Participate in hobbies? Travel? Or however else you’d ideally spend your time.
Ideally, you want to come up with the amount you plan to spend annually in retirement, and from there, you’ll be able to calculate how much you need to save before this can become a reality. Again, “financial independence” doesn’t necessarily mean you stop working altogether — but maybe it means you’re able to take on a much lower-paying, passion-project type of job, or even pivot to volunteering or organizing. Then, do the math:
The Rule of 25: this means you multiply annual desired expenses by 25 to find your target nest egg. So, if you are planning to spend $150k a year in retirement, you would need to have a $3.125M portfolio before that could happen. Of course, this is typically the rule recommended for retirement around the age of 60+; if you want to retire early, be more conservative and multiply by 30 or 35.
Use an online calculator to factor in your retirement account contributions, pensions or other retirement income, but consider being conservative with Social Security assumptions, especially in our current political climate.
Conduct a major financial review annually. Again, check if your risk tolerance and asset allocation still align with your goals — major life events (kids, caregiving, relocation) may shift your strategy! Avoid ever fully pausing investing, even during financially lean times — at minimum, take advantage of your employer match!
Lastly, practice emotional mastery over your financial decisions. Remember that the biggest threat to your long-term gains is often your own brain. Get used to riding out stock market cycles, knowing that bull and bear markets are normal — and resist panic selling. Internalize that you’re in this for the long game. That even goes for part of your retirement, depending on what age you’re lucky enough to retire!
Tune in soon for Part 2, where we’ll tackle what to do next with your money if your income (or net worth) is under $100K!
