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If You Are Young And Have A High Income: Treat It As A Windfall

By almost any measure, I had hit the jackpot.  I graduated from law school in 2013, with honors, and landed a job at one of the largest law firms in the midwest.  In an era when law students were – and still are – frequently finding themselves unemployed or underemployed, I was one of the “lucky” ones.  My starting salary in my first ever real job was $110,000 per year.  Here I was, a 26 year old kid making a salary that my middle class parents had never earned in their entire lives.  The most I had ever earned in a year before was about $20,000.

According to the Bureau of Labor Statistics, the average salary for 25-34 year olds in the United States is $38,324 a year.  I was making nearly 3 times that amount.  By 2016, my salary rose to $125,000 per year.  I was a baller!

But, like almost all new lawyers (or almost anyone entering a high paying professional field), I also had sizable student loan debt: about $87,000 worth.

So what is a newly minted 26-year-old lawyer to do with this type of income?  I worked hard to get through law school after all – I deserve to live it up!

And that’s how many young lawyers do it (or doctors or dentists or anyone entering a high paying field at a young age).  The new lawyers that started at my firm or at competing firms around town mostly followed the same sequence of events.  Some bought new houses within a year or two of starting work.  Those that didn’t buy a house lived in the hippest neighborhoods and in the hottest luxury apartments in town, replete with jacuzzis, balconies, and rooftop patios.   One young lawyer I knew spent half of his take-home pay on a penthouse apartment! Living in those luxury apartments also meant close proximity to high end restaurants and bars, which meant regular outings to those places frequented by the high earning young professional.

Everyone had student loan debt as far as I was aware.  But that was normal for a new young lawyer.  When you’ve got this high income coming in, you’ll be fine!  Heck, my standard repayment for a 10-year student loan was in the neighborhood of $1,000 per month – about 11% of my starting salary.  That’s not really all that much when you think about it. Certainly manageable to be able to live well and pay your student loan bill without worry.

That’s not the way I approached my new job.

I didn’t want to be the normal young lawyer and take 10 years to pay back my student loans.  There was an opportunity to do something great with this newfound income.  Most importantly, I knew I didn’t want to be stuck in the shackles of the golden handcuffs, forced to stay in a job because of the money.  A time will probably come when your job is the worst thing in the world and I didn’t want to be forced to have to stay in a job I hated because I needed the paycheck to keep up my lifestyle.

So the way I approached my salary was to treat it as a windfall.  I didn’t act like I made six figures.  Instead, I acted like I made normal money for someone my age.  I lived in normal apartment buildings and paid average rent for my area.  But that didn’t mean I was wanting.  I still went out to eat, still lived in good neighborhoods, and still hung out with friends.

I just didn’t spend like I was making six figures.  Instead, I spent like I was making a normal income for a 26-27-year-old young professional.  If my closest friends were making less than half of what I was making, then why not just live like I was making that too?  I treated the rest of my income as a bonus and used it to pay my loans and get myself more financially settled.

Now, 2.5 years later, I’m free from the student loan shackles.  And because I was free from student loan debt, I was able to take a new, more satisfying job, making $50,000 less per year without even blinking an eye!

So my advice:

If you are young and have a high income, treat it like a windfall.

I’m not saying to act as if you don’t deserve the income.  If you are young and worked hard to get to where you are, you absolutely deserve to be paid appropriately!  But don’t get caught up thinking you’re suddenly a big shot because you are in your 20’s and making a ton of money.  You’ll have plenty of time in the future to be a big shot if you want.  You don’t need to be the big shot yet! Most of your peers aren’t big shots. It won’t look weird if you live modestly right now.

I think this video of Dave Ramsey answering a question from a new lawyer/doctor couple is a great example of the way most young, high income earners act once they get into their first jobs.  Basically, a young lawyer and doctor couple tell Dave that they have $420,000 in student loan debt and are starting their careers and expect to make $550,000 a year.  They want to buy their “dream home.”  Even after being told not to buy the home and instead, to live cheap and pay off the loans, you still get the feeling that this couple is going to buy the house – because that’s what you are supposed do when you make that much money.  Imagine what they could do if they lived like they made $80,000 per year and treated the rest as icing on the cake.

Don’t squander your high income. 

When I left my job in June 2016, I asked some of my peers how they stood on their student loans.  No one that I had spoken to had made a dent in their loans.  Instead, they appeared to have spent it on their apartments and fancy restaurants, basically, living the life that’s expected of a six figure earner.  They paid the minimums on their loans.  After 2.5 years, they basically had nothing to show for all their hard work.

You never know what the future may hold and you want to give yourself the flexibility to do what you want to do and not be dictated by what your monthly payments are.  You’ll have all of your life to make money.  Treat those early high-income years as a bonus and get yourself on the right footing.

Your future self will thank you.


  1. FP major props dude! Well done not falling into the trap of lifestyle inflation and quickly paying off what many would see as an insurmountable student loan debt. Many people start working and are immediately paid more money than they have ever made in their lives and fall into the consumer spend spend spend pattern. They must not understand the repercussions of this down the line or simply do not care.

    • Thanks Dollar Engineer! I think its just a lifestyle thing. When you enter into these big money jobs, there’s a feeling that you deserve certain things now The thing is, these jobs might not last forever. And it’s not normal for a mid-20’s person to make six figures. If you live like you make half of that, you’ll still be able to keep up with all the Joneses!

  2. Jon Jon

    Way to go FP! You are certainly wise beyond your years in money management. If more people took a thoughtful approach to their spending, they could be in a similar situation. Unfortunately, many people get caught up in living the lifestyle they think they should be living and not thinking about the future.

    You bought yourself an option to take a lower paying but more satisfying job – well done and keep up the good work!

    • Thanks Jon! It was definitely great when I made that last payment and knew I could leave if I wanted to.

  3. Great advice! So many recent graduates with high incomes don’t think about the consequences of living “normally” and spending so much of their money on rent and trendy restaurants instead of paying down their debt first. They are setting themselves up to be buried in debt the rest of their lives because they think they can afford the nicer things. Glad to see you and many other bloggers realize that this isn’t normal and make debt payoff a priority.

    • Thanks Paige! It’s not even so much about getting the nicer things as it is living beyond where you should be at that age.

      What I mean is, my non-lawyer friends were making less than half what I was making! If I lived just like the “normal” 26 year old and treated the remainder of my income as a windfall, I was still living as well as my “normal” friends.

      The high earning young person is an anomaly, not the norm, right? I could live like I was making 50k a year and no one would think that was weird, since that’s what they were already making anyway.

      • Sorry, I wasn’t super clear in what I meant. It was really early and I had just woke up. By “normal” I meant living beyond your means or not spending/ saving wisely when coming into the real world making significant money as I’m sure you saw many of your peers doing as lawyers tend to be paid pretty well. Many recent graduates unfortunately see that amount of money and think they can do whatever they want with it with no consequences.

        I would say a high earning recent graduate would not be the norm, but being in the social services field, many of my fellow recent graduates tend to make more and therefore spend more than I did following graduation. I am seeing people who make twice as much as I do struggle to pay student loans because of the other lifestyle choices they have made.

        Even living off of $50k a year (depending on where you live) can be quite a nice lifestyle, and paying off debt with your remaining income would still have it paid back very quickly.

        Hope that makes more sense, sometimes it’s hard to convey things over text.

  4. Combined Mrs. A.E. and I do pretty well, we earn way more money than we need to get by – using our raises over the last 3 years we have been able to drastically transform our finances without cutting a lot of spending on fun experiences.

    You figured it out early – and will be making a lot of people jealous down the road!

    Happy to have another MN blogger in the mix

    • Thanks A.E.! I’ve been super inspired by the PF community, so hoping I can share some of my knowledge and experiences.

      Great to hear that you’ve been living well too and banking the raises!

  5. Some people can’t get ahead because they have a spending problem. Some people can’t get ahead because they don’t earn enough. Some people spend too much and don’t enough. It sounds like you’re set up to have a high income and low spending; the best of both worlds. If you keep this mentality, you’ll find it difficult NOT to succeed :).

    I agree with you, life is long and uncertain, as long as you’re enjoying life along the way – why not save a big portion of your income? Go you!


  6. Yes this! I graduated from college at 21 and made $100k my first year, which is a crazy amount of money for someone who went to college in a cheap college town. So I didn’t live it up too much and I saved a ton. I’ve kept that up over the years as my income went up to $200k and back down to $150k. I’m now sitting on a net worth of just under $800k thanks to my hard work of savings in the last six years.

    • That is awesome! I’m hoping one day to be in the same position as you! Unfortunately, as a lawyer, I didn’t get to start working until 26-27 years old, and then I had to spend a few years digging myself out of the hole I put myself in. Ms. Panther, who is currently in residency, isn’t even going to start working until she’s 32, so it makes it even more important for us to save in order to catch up!

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