Reshaping How you Think About and Plan For Extra Income

Money Files

My clients always tell me when they come into extra money—whether it’s extra income from a freelance job or a birthday gift or a tax refund. And then they tell me how they spent it. Oftentimes, they overspend without even realizing it. A $1,000 bonus from work can turn into $1,500 in spending if you’re not paying attention.

Extra income can show up in our lives in many ways. The important thing is having a plan in place for how to spend that money.

Today, I’m sharing how to avoid overworking your dollars when you have a little extra windfall. You’ll understand the mindset shifts that you need to make as well as questions to ask yourself about your priorities. It all comes down to reshaping how you think about extra money and practicing intention around spending it.

In this episode, you’ll learn…

  • An example of how my client spent some extra money she received and how she wasn’t fully accounting for every dollar when spending [03:06]
  • What “overworked dollars” means and how you end up accidentally overspending [03:55]
  • How to shift the way that you think about extra money [06:41]
  • How to identify if it really is extra money or if that money is already committed [07:31]
  • How to be conscious and intentional with extra income (hint: write everything down) [08:20]
  • Considering your savings and debt when you have extra money [09:12]
  • The importance of planning ahead [10:13]
  • How to practice pressing pause by transferring extra money to a different account before spending it [11:22]
  • Why paying attention to gross income vs. net income will keep you from overspending [12:49]

Tune in to this episode to learn how to reshape your thoughts about extra income and extra money and how to implement tools to help you stay on track.

In the episode…

When it comes to “extra” money, you need to first understand whether it’s truly extra or not. Your tax refund, a bonus at work, or a scratch-off lottery ticket … That’s extra money. When you get 26 paychecks in a year instead of 24 … That is not. And if the extra money is a raise, for example, you have to take into consideration the taxes that are going to be taken out. A $10,000 raise does not mean $10,000 in your pocket!

It’s easy to get excited when you know you’re coming into some extra money. And that excitement can lead to unconscious spending. What you need is a plan. A plan for where the money goes, whether it’s to credit card debt or a vacation or new work clothes. That money isn’t really extra if you already have commitments to pay for. It all comes down to shifting your mindset and implementing a simple process to ensure that you don’t overwork your dollars.

Here are the steps to take when you have extra income or money…

Step 1: Shift the way that you think about extra income.

Take a pause before spending. Ask yourself the questions: Is this actually extra income that I can do whatever I want with? Or do I already have financial goals that I am committed to? If you’re behind on a bill, then the income isn’t really extra. Really take a pause to think about where the money needs to go.

Step 2: Write down your extra money goals.

Write down everything you want to do with this extra money. Even if it’s only $50 or $100. Writing it down will help train your brain to consider any extra amount of money you bring, no matter how big or small. And it pushes you to be intentional. Whether you want to pay off a medical bill or go on a girls trip, attach specific dollar amounts to your goals.

Step 3: Consider your savings and your debt.

This one is important. Whether you want to prioritize your emergency fund or your vacation fund, think about your savings goals and write them down. If you have a credit card bill to pay off, or if you want to pay a little extra over the minimum payment, think about your debt goals as well. Again, attach specific amounts, and write it all down.

Step 4: Plan ahead.

Plan ahead. Maybe you’re getting married in a year. Maybe you know your dog is going to have surgery. Maybe you need a new roof in five years. Think about what’s going to come up. Be realistic about assigning dollar amounts. You likely have lots of plans, both necessary and fun, and you want to make sure that you understand how the money is getting allocated across multiple goals.

Step 5: Move your extra money into a separate account.

Think of this as a holding place for your money. This allows you to take a pause and makes you less likely to spend that money and then not even realize where it all went. This allows you to look at this money separately from your regular checking account (where you do your spending) and really take time with steps 1-4.

Takeaways from this episode…

  • You can avoid overworking your dollars if you have an intentional plan for extra money that comes in.
  • No matter how much extra money you have, you can and should consider every dollar and how the money fits into your financial goals and commitments.
  • Writing down the exact amount of extra money you’re bringing in and attaching it to a money goal trains your brain to be conscious of your spending.

If you’ve been waiting for the perfect time to start working on your money management skills, here’s your sign: The time is now. Apply to work with me, and let’s start working towards your financial goals.

Transcript for “Reshaping How you Think About and Plan For Extra Income”:

Hi and welcome to Money Files. I’m Keina Newell from Wealth Over Now. I work every day with professional women and solopreneurs to help them get out of financial overwhelm and shame so they can experience more flexibility and ease with their finances. Are you ready to gain confidence and learn to manage your finances intentionally? Tune in and grab financial tips that will help you master the way you think about and manage your finances. Hello, and welcome back to another episode of Money Files. I hope that you have enjoyed this first season of full podcast episodes if you are new here. 

My name is Keina and I am the owner of Wealth Over Now. But money files actually started with me, just interviewing my clients and having candid money conversations with them. And this season, I am tackling and addressing some very common money issues, and I love hearing from all of my clients, people in the world that are listening to podcasts. So if you follow me on social media, drop me a line and tell me how impactful this episode or the podcasts in general has been for you. Or even better. Go to wherever you love to listen to podcasts and leave a review. I would just love to know how you’ve shifted your relationship with money since listening to episode one through I think we’re at 14 or 15 right now, but like I said, thank you for joining me for another episode of Money Files. 

And today, what I actually want to talk to you about is extra money. I hear my clients all the time. Tell me about extra money, and there’s a lot of different ways this extra money shows up. Sometimes clients are talking to me, and I’m sure that you can relate to this about extra income, whether it’s they’ve taken on. Maybe they’ve taken on an additional role to create extra income in their household because they have an intention to use that extra income to pay off debt. Maybe they have extra income because maybe you got a hundred dollar gift from a parent or a friend or, you know, you randomly want $100, or maybe you got a bonus at work. 

Right now, I’m recording this episode and we are in April of twenty twenty two and it’s tax season. I feel like people think about their taxes as extra income as well, or another common one is if you are on a twenty six cycle paycheck. So if you think about how you’re paid throughout the year, some people are paid twenty four paychecks a year and some people get twenty six paychecks a year. And I hear my clients say, Oh, I have an extra paycheck. Let me just immediately debunk that you do not have an extra paycheck. We want you to do the same thing that you would do with any other paycheck. But we go into a whole podcast episode about that and creating financial consistency. But I’m going to go back to this idea of extra income and managing extra income. 

So an example, actually, that happened with a client this week. She had a thousand dollars that she got from some contract work that she’d done. So when we went in to look at her finances, I was asking her like, You know, where did the thousand dollars go? What did you do with a thousand dollars? And she said, Oh well, I used it to pay towards my credit card and I’m like, OK, well, you know, based off of what you told me, you spent $100 here, you spent three hundred dollars here, which means that you spent $400 of it. So did you make a $600 payment to your credit card? So we get into her accounts and we see that she’s actually made a thousand dollar payment to her credit card and that’s not the end of the world. 

The point of the story is the fact that we often times don’t have clear intentions for the money. I call it like having overworked dollars, so we’ll have extra income and we have this plan, but we haven’t maybe written out the plan, so we can’t see it clearly. And in this case, my client is spending fourteen hundred dollars versus spending a thousand dollars. So she’s not going to see the impact of the extra income that she actually desires, like if the intention for the income was to fully pay off debt. Then we want to be really clear this a thousand dollars is just to pay off debt. But what I see commonly happen is in this case, she put some aside for taxes. She paid her time, she paid $100 towards tithe, and so she hadn’t really accounted for every single dollar. And what I call that is like having overworked dollars. These dollars are supposed to do multiple jobs. She only had a thousand of them, but they ended up doing $4500 worth of work. You will know if you’re experiencing this if like you get extra income and maybe you have to go and you’re like actually trying to catch up on things that you’ve already spent money on because in advance of getting the income you thought like, Oh, I can go ahead and pay for this trip, I can go ahead and go out to brunch today. I can go ahead and buy this gift for myself. And so you’ve committed the money before you actually get it, but then maybe you get the money. And you recommitted to something else because you have an unexpected bill that comes along or you’ve actually gone to brunch four times instead of one time. 

And so when you’re thinking about actually using the extra income, you make a lot of plans in your head and you do a lot of mental math. And by way of making plans in your head and doing mental math, you actually end up overspending. So that’s what I mean. What I’m saying, like your dollars are overworked or they have too many jobs, it’s because you’re doing mental math, which then means that you overspend and you probably feel like you’re you’re playing catch up when you do get the extra income. An extra income can come in in different quantities, like I said, it could be that you get an extra hundred dollars because maybe your parents are giving you money for your birthday or you get a bonus at work or like I said, right now, we’re in tax season and so people oftentimes commit the refund check that they get. And it’s been committed to a vacation, but it’s also been committed to to a shopping spree. And it just it has a lot of different jobs by the time it actually hit your account. 

So the solution here is that I want you to shift the way that you think about extra money, right? If you know that you have extra income that’s coming to you. Maybe the thing that I haven’t talked about is even just thinking about like you’re getting a pay raise. And sometimes we think I’ve experienced this with with clients where it’s like they could be going from eighty thousand to one hundred thousand. And so they assume and take on larger payments or they start investing in something. And when I say investing, I really mean spending. In this case, we’re like, Oh, I’m going to go buy the new car or I’ve been waiting to get a new apartment. And so they make that commitment before they actually have the money in their account. 

So what I want you to do, going back to what I want you to do is I want you to shift the way that you think about extra income. And the first question I want you to ask yourself is like, is this actually extra income? Like, how do you know, because nine out of 10 times you probably already have financial goals that you are committed to and you are attached to? And so when you get extra income, you probably start thinking about those. So I just want you to really think about like, is this extra? Because if you get an extra five hundred dollars, but maybe you’re behind on a bill or you need five hundred dollars for for some other commitment that you already said, like, Oh, when I get this next lump sum of money, I’m going to do x y z, whatever your x y z is. Just think about like like what commitments have I already made? And is this extra income actually extra income? And beyond just thinking about it? I want you to write it down, like write down all the things that you would like to do with the money that you have coming in. And even if it’s one hundred dollars like write it down because it’s going to train your brain to think about any amount of money that you get that may exceed your normal paycheck. It’s going to push you to be conscious. You want to be conscious, you want to be intentional. And so part of this is going to say like, Oh, I’m going to press, pause and let me think about all the things that I possibly want to do. So I want you to think about what are the fun things you want to do? Maybe you’re like, Oh, I want to go on a trip. I have already been thinking about how I was going to have that girls weekend or whatever that is like, write those things down, but also a track, attach a dollar amount to it, like be realistic with yourself. Like how much money would you spend on that fun thing? 

Then I want you to think about, OK, where am I with my savings? Have I been thinking about or wanting to prioritize saving money? Maybe I’m looking to boost my emergency fund. Maybe I’m looking to boost my holiday fund. Maybe I’m looking to boost my vacation fund. But like, write down those things that you might want to do with this extra income. Then also write down like if you are someone who is in the middle of paying debt, write those things down as well. Like what debt payments are you looking to pay off a credit card? Have you committed to making an extra payment above the minimum payment? Just like write down the commitment, write down the intention. What is the amount? Just get all of the things out of your head and onto paper so you’re not just thinking and exploring what I would call mental math. Then the other thing I want you to do is also think about planning ahead. Right, so we have the fun things that you might be thinking about, we have the savings that you’re thinking about, we have the debt that you’re thinking about and I want you to think about what’s coming up for you. I have a client right now, it’s a couple and we’re talking about planning ahead. They actually own some property. And so we’ve been thinking about like, OK, you know, that you want to repair some property. So what are the things that are going to come up with? They need to like, replace a roof, they want to replace windows, they need to do some renovation. So there’s these things that they want to be able to focus on. And so I want them to be really clear so they’re extra income doesn’t end up going towards a trip or a vacation or they’ve committed to both of them, but they haven’t actually thought about the numbers and how those align. 

So the thing that we’re working on right now is to say, like, let’s actually write down how much the roof going to cost, how much are the windows going to cost? So we can also look at the amount of extra income that they’re going to be getting and ask ourself, like what’s realistic with what we can actually do with the money that’s going to come in? That’s that’s extra. So first thing, like I said, is I want you to shift the way you think about money asking yourself, Is this extra writing down all the things that you would like to do with the money? Another best practice here, especially if you’re getting a large lump sum of money, is to just transfer that money to a different account. I don’t want you to spend it like you have your list. I want you to practice pressing pause. I’ve written down everything that I want to do with the money. 

Now I’m going to press pause, and I’m not going to necessarily do those things because I’m going to wait to actually get the money so I can make a plan. And once I have the money, I’m going to transfer it to a different account. So I know that, like, that’s actually extra, because that’s another thing that happens is that the extra money comes into your account and it gets spent like the rest of the money in your account because you may not have a budget and you might be spending from your bank account balance so you don’t actually get to see the extra money that you have. And so one way that you could think about managing extra income as you’re thinking about the plan and how you want to spend it is to say like, Oh, I know I’m getting a thousand dollars, I’m immediately going to transfer to this other account that I know is just going to kind of be like a holding pen for that extra income. And then you won’t have to worry about that money just dissolving into thin air because you’ve already spent it. It’ll allow you to have the money in your possession and then really go back to your plan and think about, OK, I have this thousand dollars now I can think about how I want to spend it. This will also be really helpful. 

One of the common pitfalls I see with extra money, especially when it comes in the form of like a bonus or commission for people. Is that they think about, you know, I’m getting twenty thousand commission or I’m getting a $10000 bonus. Oftentimes those numbers presented to you is a gross number, so growth is like that big amount before they take out the taxes. And I always remember that gross is the bigger amount because it has more letters. The net amount is how much you take home after taxes. So I always remember net because it has a smaller amount of numbers, and the net amount is also the smaller amount that you get to take home. If you develop the system where you’re going to transfer that money and not spend it until you actually have it in your possession. You’ll get to see like, OK, I had that $10000 commission, but that really only turned out to be six thousand dollars after taxes, or it was five thousand dollars after taxes. And so that’s even going to let you be more intentional about your planning, because I’m sure some of you can imagine where you haven’t planned in that way and you think, Oh, I’m going to get $10000, I’m going to do this, this and this, and maybe you’ve spent the ten thousand dollars before you actually got it. And then when you get it, it’s really only, let’s say, six thousand dollars. And now you’ve overspent by four thousand dollars because you weren’t thinking about the fact that they were going to take taxes out of your commission or your bonus. 

So really, just wanting you and in this episode, I’m really just wanting you to reshape how you think about extra money. I don’t want you to have to use extra money to pay for past mistakes. I don’t want your extra money to be overcommitted because you’re overestimating how much you’re actually going to be getting. And the result that I want you to create for yourself is that I make conscious decisions like I’m not going to tell myself I have extra money. I’m going to tell myself that I have some more money than I usually have, and I’m going to choose to be intentional about how I desire to spend it. Because even. Just implying extra money, just being really clear, what does that mean when you think about extra? Because if you’re following me, then we are operating off of a financial plan. We’re operating off of a spending plan. And regardless of any amount of money that we get into our life, we’re going to make an intentional plan for how we desire to spend that money so that we can advance our goals and that we can be spending in alignment with our values. All right. Well, that is our episode today. It’s very short and sweet. I want you to be thinking about how am I using extra income in my life? How do I desire to use extra income in my life? And if you are ready to take this work deeper and you want to start applying my simple five step process to your life, you can go to and you can apply to work with me. We will work together in a five month coaching partnership. We will be talking three times a month and coaching back and forth on both the technical pieces of money. But I’ll also be helping you on the mindset. All right, I look forward to working with you. Have a great week. Thank you so much for listening to money files. If you’re ready to take the next step to reach your financial goals, head to And let’s get started. 

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