If you're set to earn more money next year or if you received a year-end bonus, then a congratulations is in order! At this point, you'll probably want to take your pay bump and spend it on whatever gift you didn't receive during the holidays. (Santa messed up again!) While I'm totally in favor of spending some of your pay bump, I'm also in favor of using that money to shore up your finances.

One of the biggest problems in personal finance is spending money in lockstep with your increase in income. For example, if you earn a $2,000 raise, you would also spend $2,000. This phenomenon known as lifestyle creep isn't unexpected given our preference for instant gratification; however, by spending the "extra" money now, you're not allowing yourself to reward yourself in the future. More importantly, falling victim to lifestyle creep means that you're constantly increasing the amount of money you need to maintain your lifestyle. What happens if you lose your job? Or what if your income goes down? "Downgrading" your lifestyle in response to making less money is exceptionally difficult, and if you're not able to appropriately adjust, then you'll almost certainly fall into debt and become more stressed as your financial position deteriorates.

Okay, so now that we've underscored the perils of spending all that extra money you've earned, what should you do instead? Ask yourself four questions. The answer will point you in the right direction.

1. Are you able to pay your bills? If not, cut out the non-essentials or use some of the extra money to make sure you can pay your bills in full and on time.

2. Do you have an well-stocked emergency fund? If not, fill it up.

3. Do you have high-interest debt? (loans above 10% like credit cards, personal loans, etc.) If so, consider using some of the extra money to prepay it.

4. Are you saving enough to achieve your goals, including retirement? At the bare minimum, make sure you're getting the employer match, if eligible.

Your answers to the questions above will help determine how you should split up your bigger paycheck or where to put your bonus. Moreover, if you don't need to take action for the first three questions, then try to stretch yourself and save 50% of your increase in pay.

Whenever more money comes into your life, try to stay grounded and ignore your impulse to spend it all. Delay the instant gratification, set yourself up for future financial success, and then spend the spoils.