I just doubled my salary. How can I adjust my budget responsibly and still have fun?

Calculating your new take-home pay

Just because your before-tax income has doubled, doesn’t mean your take-home pay will double as well. Moving from $100,000 to $200,000 means you enter new tax brackets, and if you have any other income outside of your regular job, you’ll have to take that into consideration as well.

The federal tax brackets for 2024 at your income level as a single filer are as follows:

• 15% on the first $55,867 of taxable income
• 20.5% on taxable income over $55,867 up to $111,733
• 26% on taxable income over $111,733 up to $173,205
• 29% on taxable income over $173,205 up to $246,752
• 33% on any taxable income over $246,752

Federal tax rates begin at 15% and rise correspondingly with income. So, you’ll need to do some calculating to understand what your actual tax rate will be. On top of that, you’ll have to calculate taxes for your province or territory, if any. Depending on where you live, you may have no additional provincial taxes, a progressive rate like federal taxes or a flat rate regardless of your income.

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Spending responsibly

Once you have a good handle on the figure that will flow into your bank account each month, it’s time to set a new budget. Start by looking at your old budget and spending. Were you happy with how you were managing your money? Did you feel like you were getting the most bang for your buck, balancing savings with enough funds to enjoy your favorite activities?

It’s a useful, if time-consuming, step to track your spending from the previous year. You can gain a lot of insight into how you used your money and where you can add or trim spending to align with your personal goals. With your new income, you may want to seek the advice of a financial advisor to help you adjust your contributions to retirement savings and investments.

You may also find the prospect of paying down debt or purchasing big-ticket items like a home to be more realistic.

According to the Canadian Real Estate Association, the national average home price sat at $668,097 in February 2025, a 3.3% decrease from the year prior. Home values will vary by location, but you now have an opportunity to save up for a large down payment. If you want to pay off debt or own a home, your new budget should account for these goals.

Avoiding lifestyle inflation

Getting a new job with a higher salary can be a heady experience. You may feel tempted to indulge in excess spending to keep up with your peers in your new role or to demonstrate to friends and family that you’ve finally “made it.” However, it’s easy to slip into living paycheck-to-paycheck with a big income if you’re not careful about your spending.

To keep it in check, make sure your money moves align with your values. Ask yourself how you really like to spend your free time and allocate a portion of your budget to those activities. If it’s important to you to give back to your community or donate to funds you support, consider building that into your budget over more frivolous spending.

One common purchase people make after boosting their income is a new vehicle. In this case it’s best to think in practical terms. Do you really need a fancy new car to commute to work every day, or does it make more sense to buy something that best supports your lifestyle? Cars drop in value quickly, and in many cases the best value can be found on the secondhand market.

Managing your new take-home pay goes hand-in-hand with managing your new lifestyle. If you were mostly satisfied before your income upgrade, how much really needs to change? This is a chance to live a good life while pursuing long-term goals to set yourself up for a happy and comfortable future.

Sources

1. Canadian Real Estate Association: National Price Map)