Strategies to Maximize Extra Income | Global News Avenue

If you are a federal employee, the recently announced average of 2% salary increase 2025 may not look like winning the lottery. But it’s worth investing those funds in a way that’s best for you. This is especially true now, as many eyes are on government workers. Here are some initiatives to consider.

3 good uses for a salary increase

Financial advisors often recommend using raises, bonuses, or other additional income in the following ways:

All three are good goals. But with the new presidential administration talking about deep cuts to the federal budget, it’s worth highlighting one last item for federal employees. Your job may not be at risk, but ensuring you have a sufficient emergency fund could come with a big expense dividends Peace of mind.

How big an emergency fund do you need?

Conventional financial wisdom calls for building an emergency fund worth three to six months of your life. living expenses. But a lot depends on how stable your job is and how quickly you can find another one if you lose it. For federal workers, much will depend on how their current skills transfer to the private sector.

Louis Barajas, a certified financial planner in Santa Ana, Calif., said he sometimes advises clients to choose a fund that covers 18 months or more, especially if they are in an industry that typically It takes a long time to find a job.

He said everyone should have an emergency fund that is at least enough to cover car, home and health insurance deductibles.

Where to put your emergency fund

Likewise, conventional wisdom recommends keeping emergency funds in a “liquid” account so you can withdraw funds quickly. But there is liquid, and then there is liquid.

Bank checking accounts that pay zero interest are liquid but not a good place to park large amounts of money. Barajas Recommended High Yield Savings Account from online banking or money market funds From major mutual fund companies. The former is supposed to be federally insured (but be sure to ask), while the latter is not but is historically very safe. Both currently pay close to 5% interest.

Barajas also offers an additional tip: If you own a home, consider applying Home Equity Line of Credit (HELOC) At a bank or credit union. It shouldn’t cost you anything unless you actually use it, and it will provide a source of cash if you need it. “The time to get a HELOC is while you’re working,” Barajas points out, “not after you’re fired.”

bottom line

Everyone should try to build a sizable emergency fund in case of a job loss or other disaster. Using at least part of the raise would help. One final quote from conventional wisdom: It’s better to be safe than sorry.