Got a Pay Raise? Find Out the Smart Things to Do with It
A survey made by the National Association for Business Economics revealed that 49% of employers gave pay raise to their employees during the last quarter of 2015. The survey also showed that 58% of employers are planning to give a raise during the first quarter of this year. If you received the great news that you would be getting a pay raise, here are some things that you should consider so that you can make the most out of it and prevent your money from going to waste.
Don’t Spend the Money You Don’t Have
Even when you have an idea on the percentage or amount of your raise, you’ll never know how much you would really have in your hands once you get your first pay that already has the raise. You need to consider that there are taxes and other deductions involved. If you get too excited to spend more because you know that you’ll have a higher salary on the next payout, you might be surprised that it’s not as high as you’ve expected. To prevent this from happening, wait for the next payout that already includes your raise to know how much you would really get.
Pay Off Your Debts
Use the money to pay off your loans so that you would be free from debts as soon as possible. This would free you from the interest that accumulate throughout the years. If you prioritize paying your debts, you’ll be able to save the money that you pay for the interest once your loans are paid completely.
Invest on Your Retirement Plan
Many people are not able to save enough money for their retirement plan. If you get a pay raise, you may invest this to get a retirement plan that would fit your needs. Your retirement plan is vital to ensure that your needs will be covered once you retire from working. If you have one but you feel that it’s not enough, this is the best time to add more to your retirement funds.
Re-evaluate Your Budget
This is very important once you have your raise. Re-evaluating your budget would help you determine where your money is really going. You may then limit your spending on things that you don’t really need so you can use it on other more important things such as your retirement plan or paying off debts. This may also be the best time to add in something important that you may not afford before like getting a better health or medical insurance or vehicle insurance.
Stash Money on Your Savings
If your budget is fine with your salary before the raise, you could put the additional money that you’ll get on your savings. This is also perfect if you were not able to stash some cash for emergency use before. Start saving more instead of spending more when you don’t really need to.
Reward Yourself
Budgeting and saving money doesn’t mean that you can’t have fun with the raise that you received. It’s okay to celebrate, as well as reward yourself once in a while. However, make sure that you still stick to your budget and that you continue to put money on your savings.
Be smart with the way you spend your raise so it doesn’t just go to waste.
Photo Attribution:
Featured and 1st image courtesy of Stuart Miles at FreeDigitalPhotos.net
2nd image courtesy of hyena reality at FreeDigitalPhotos.net
