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.
If you haven’t practiced budgeting, this level-up in your paycheck requires you to commit to better spending habits. See how much more you can set aside now for emergency savings. Apart from having more money for savings, you can look for other expenses you can cover with your extra income.
Tip 2: Don’t be complacent.
Don’t fall into the trap of complacency, or worse, entitlement. Your company rewarded you for a job well done, a gesture that shows you’re valued. If anything, it should motivate you to work harder.
Your superiors will see your improvement. And who knows? You might even get a higher raise at the next performance evaluation.
Tip 3: Don’t borrow more than you can pay.
Some people who’ve seen an increase in their salary may think that they’re now entitled to a higher credit limit.
Instead, use an online credit card comparison tool to fine-tune benefits and features that will help you save money in the long run:do you drive every day to work? Get a card with fuel rewards. Do you often dine with the family? Get one with cashback features.
Tip 4: Don’t forget to be thankful.
And lastly, don’t forget to be thankful for this added income. Earning that raise is only the beginning. It’ll motivate you to invest in your career. Practicing gratitude will have a positive effect on your work, and the people around you as well.
A raise is bound to attract better things in your life, and hopefully, it will make you more appreciative of everything you have right now. By being thankful and contented, you’ve saved yourself from wanting things you don’t really need. A huge win on your part, and the foundation of a more secured future as well.