When you work hard at your job everyday, it’s really nice to be appreciated with a pay raise. Any raise, even a small one, not only boosts your morale, but it helps you financially. If you are working to improve your finances, it’s best not to jump right in and spend all that extra money. Instead, make that extra money work for your financial goals with one of the following tips.
Wait Before Spending
Before you run out and start upgrading your life and budget with your new paycheck, try to wait a few weeks to see how that paycheck is going to look with your new wages. Exactly how much extra per paycheck are you getting after taxes are deducted? Once you have calculated the difference between your old and new paycheck amounts for a few weeks, then you can figure out how to allocate it the most effectively.
With the higher paychecks you now receive, it’s time to recalculate your budget. Look over your current budget and find areas that could use the extra money. If your budget is great as it is, think of extra categories that you could add to help reach your financial goals faster.
Save the Extra
One of the easiest options for your raise can be to take everything extra over your normal paycheck amount and put it in savings. Even if it is only $20 extra per paycheck–automatically put it into your savings and pretend it’s not there. You will still be living off of the same amount you were previously, but now you have more to put into savings.
Pay Off Debt
Similarly to saving the extra, if you have any debt whatsoever, use that extra money every week to pay it off faster. Again, it may not be the most fun option, but you were already used to living off your “before-raise” amount, so you won’t even know it’s missing.
Another option is to automatically put the extra money into your retirement or other investment accounts. Planning for your future is never a bad option, and like most of these tips, every little bit adds up. If you don’t feel like you make enough extra in each paycheck to invest, just save it all up and make one lump sum investment each month.
As you can see, there are many options for your pay raise to be used effectively. When you really plan for the extra in your life, you can methodically reach your financial goals faster.