If you get the deserved pay rise this year, then you might be thinking a few things, for example, the cost of living is going up, so this will help pay those growing bills.
However, here are some suggestions of things that I believe you should also consider.
How do you Reward Yourself?
You thought I was going to say invest it, didn’t you? Yes, I will come to that but firstly, if your pay rise is a decent one, it is important to consider why you do all this hard work in the first place. A nicer holiday this year, a treat to a posher meal out occasionally or as little as some new outfits to make you feel good.
Life is for living and though working hard and saving harder is a great way to potentially retire faster, it doesn’t necessarily mean that it is for everyone or that it is a sustainable way to live. So my recommendation is to decide now on how much of your salary increase is for you, as otherwise you will likely end up blowing the lot and be no better off financially, than you were before.
An Eye on the Short Term
You will likely have some larger expenditure planned, that could require some saving, before you can afford this. Getting married, moving to a bigger home or even a gift of a house deposit to your kids.
Working out how much that will cost and when you plan to spend the money is a good place to start. You can achieve that by simply dividing that figure by the months until your goal date. That amount is the total to set aside each month from your pay, which could now be possible with your new pay rise.
Increasing Your Wealth
Now that I have gone through the ways that you can spend your new pay rise, I am going to talk, of course, about the elephant in the room. At the end of the day, if you spend everything that comes in, you will be no better off financially than you were before.
Often, I hear people say ‘when I am earning more, I will think about investing’ but then that time comes and goes with nothing changed apart from a nicer car on the drive.
Just a reminder that you oversee how much money you save and how much you spend and I would encourage you to use the pay rise for your long-term plan and start saving and investing. If you want to know how to get started with this…
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