4 Things Not to Do After Getting a Raise
September 12, 2017
You just got a pay raise! Congratulations! After all, your hard work is finally rewarded. Plus that additional income will definitely improve your financials. As soon as you see your pay slip with that extra cash, plan ahead and avoid possible money pitfalls. Remember that it’s not about how much you earn—but how much you save. Here's a list of things you shouldn't do once you get that raise. Once followed correctly, it should guide you in making a healthy lifestyle adjustment—ultimately securing your future.
Tip 1: Don’t fall for an instant lifestyle upgrade.Aptly called “lifestyle creep” as it catches people unaware, an “instant lifestyle upgrade” affects those with growing disposable incomes. This lifestyle inflation happens when previous luxuries become necessities simply because you can now afford it. The problem starts when emergency savings and other responsibilities are neglected to keep up with the lifestyle upgrade. If unchecked, it can lead to living from one paycheck to another, delinquent debt payments, and zero savings. You may even catch yourself with a list of things to buy with the extra money you now have. To prevent lifestyle creep from impacting your future earnings, calculate how much you’ll get after taxes. Seeing your new net monthly income will give you a realistic look at your finances. If you think you might fall for impulsive spending, automate your bank savings so you’re left with enough money to budget and spend.
- Calculate your taxes: This should be the first thing to do after your salary increase. The online BIR Withholding Tax Calculator will instantly show you your take home pay, so you can properly start your budget plan.
- Remember to update your budget.