If you’ve taken a new job as a step up in your career or you’ve received a promotion at your current company, you’ve also very likely received an salary increase. Congratulations — that’s great news.

But before you get too far into your celebrations, take some time to review your finances, your financial plan, and your future goals so that you can make the best decisions with your money. Keep these four points in mind and you’ll be on your way to making the most of your new and improved salary.

1. Maximize the company’s benefits.

If you’ve taken a new job, don’t skate past the introductory parts where you learn about the company’s benefits. Most companies offer benefits that can boost your bottom line, but you can’t take advantage if you’re not fully informed.

Abigail Gunderson, CFP®, a financial advisor for Tanglewood Wealth Management, has a simple suggestion: Do not skip the company’s first HR meeting. In that meeting, you can learn about benefits that are essential to keeping you financially stable now and in the future, like long- and short-term disability, health insurance, and retirement plans.

Most importantly, don’t let your eagerness to jump right into your new role distract you from the importance of planning for your future. “When people start new jobs, they’re usually excited to get into the work, and this can mean a lack of focus when it comes to sitting down with the HR department to set up a retirement plan,” Gunderson says. “And when these conversations are rushed, it can have a big impact down the line, as we know that even a few percentage points a year can make a significant difference in long-term savings.”

When it comes to setting up your 401(k), Gunderson recommends asking the following questions:

  • Do the available funds offer institutional shares?
  • Are less expensive share classes of funds available?
  • What are the self-directed options?

2. Roll over your 401(k)

Moving on to a new company? That’s great, but do not forget about your old 401(k). Aaron Thiel of PNC Wealth Management points out that a “Bureau of Labor Statistics report stated that in 2014, the median number of years that wage and salary employees worked in their current job was 4.6 years. Using that figure, one could estimate that an individual might change jobs at least six times in a lifetime, which may mean an individual likely has multiple 401(k) retirement plans.”

Again, you’re going to be busy as you ramp up at your new job, but “it’s important not to lose sight of your retirement finances,” he says, reiterating Gunderson’s advice. So what do you do with your existing 401(k) plan(s)?

First, do not spend that money! “While this pool of dollars may look attractive, don’t spend it unless you absolutely must,” Thiel explains. Taking a distribution on your 401(k) if you’re younger than 59 1/2 years old means that in additional to being hit with income taxes on money you withdraw, you’ll also likely be hit with another 10% early withdrawal penalty (though there are exceptions). And of course, the most obvious problem: You’re using up your retirement funds.

Second, decide how to roll it over. If you have both a 401(k) and an IRA to choose from, “there is no right or wrong answer… and there are strong arguments for both options,” Thiel says. “You need to weigh all of the factors and make a decision based on your own needs and priorities.” This is a great time to meet with your financial advisor — and if you don’t have one, you should find one! — to determine which option is best for you “because the decision you make may have significant consequences, both now and in the future.”

That being said, Thiel lays out some considerations:

  • Reasons to roll over your 401(k) to an IRA: Thiel notes that an IRA usually presents more investment options than an employer’s 401(k) because with the former, “you may freely allocate your IRA dollars among different options and you may have more flexibility with distributions.”
  • Reasons to roll over your 401(k) to your new employer’s 401(k) plan: An important thing to keep in mind is that an IRA doesn’t have the same level of creditor protection as a 401(k). “Most 401(k) plans receive unlimited protection from your creditors under federal law,” Thiel explains. “Your creditors (with certain exceptions) cannot attach your plan’s funds to satisfy any of your debts and obligations, regardless of whether you’ve declared bankruptcy.” You never know what the future holds and this point is worth bearing in mind.

3. Don’t ramp your lifestyle all the way up to your new income

Dan White of Pennsylvania-based Daniel A. White & Associates notes that as a rule of thumb, a person’s expenses rise up to meet their income as it increases. But you don’t have to let that happen. If you’re worried your spending will increase as your salary does, White suggests that you “set up some form of savings automatically, such as a bank draft — because if you don’t, the extra money will get absorbed into your budget.” By eliminating it in the first place, you can avoid the trap.

Often, a new job or a promotion makes a new car purchase (or lease) tempting. Don’t get carried away. Edmunds.com suggests you spend a maximum of 20% of your take home pay on your car and all of the attending expenses, such as insurance and maintenance. The organization points out that a new car usually means higher insurance premiums, so don’t forget to keep all of the factors in mind when you’re upgrading your wheels.

4. Allocate your additional income wisely

“Most people binge or buy new things,” White says, “but what they have to realize is they were used to living on a lesser amount of money, so put the ‘newfound’ money to good use.”

He suggests you consider the following:

  • Pay off your consumer debt. It’s expensive to maintain high-interest debt and it’s in your best interest to eliminate it.
  • Make sure you have a nest egg. “I would recommend building up an emergency fund, then a retirement contribution” White says, “because if something comes up unexpectedly, you would have to raid the retirement account to handle it.”
  • Focus on retirement. If you’ve eliminated all of your debt other than your mortgage, focus on maximizing your employer-sponsored retirement plan.

Remember, a new job and a higher income are exciting and the urge to celebrate with some well-earned luxuries is probably strong, but you’ll do yourself the best service by planning first. “Any life changing event such as a new job or promotion is a good time to meet with an advisor to structure what to do with the additional funds,” White says. So get on GuideVine or hop on the phone and make an appointment with your financial advisor.

Laura Willard

Laura Willard

Laura Willard is an adoptive mom, a law school grad who has successfully avoided using her education for eight years and counting, a writer, a curator and an editor. She cares deeply about social justice issues. Laura enjoys spending time with her family and friends, walking on the beach - something that's become quite difficult since she left San Diego and returned to Arizona a year ago - and a good glass of wine. She loves to spend hours on end writing, but avoids doing math at all costs. (She loves her accountant dearly.) Laura's certain sarcasm is a language, so she's totally bilingual.  Follow Laura on Twitter and Google+ and Facebook