10 Tips for Managing Money After a Pay Raise
If you are reading this, you probably just got a pay raise, are hoping to get a pay raise soon or just want to acquire knowledge. Either way, all employees love the idea of a pay raise. I mean, who doesn’t want extra cash? So, there is the temptation to spend more when you start making more. But what you really need to do is wait for a while, maintain your standard of living knowing that:
‘What you do with your extra cash matters a lot.’
So, after a pay raise, here are a few steps to help to manage your money wisely:
Calculate your new take-home pay with these simple steps.
Gross Pay Raise = New Paycheck — Old Paycheck
Net Pay Raise = Gross Pay Raise — (Tax + Paycheck Deductions [health, insurance, transportation, office gym membership etc.])
After doing this, you’ll know exactly how much more money you are actually earning. Then, move on to re-budget based on your net pay raise.
In order to maximize your raise, you need to rework your former budget. And if you didn’t already have one, now is the time to create it. Cut unnecessary expenses such as unplanned splurging on pizza or reduce the amount allocated to them and redistribute your resources. You can also use the Pettysave sample budget guide.
3. Get rid of high-interest debts ASAP
Based on people’s experiences, it is advisable that you wipe out any existing debts such as your student loans, the bank loan you took to build a house or buy a new car and whatever else you might have borrowed for. This prevents the interest on debts from devouring all your hard-earned money.
4. Have an Emergency Fund (SAVE!)
This gives peace of mind against any unforeseen circumstances that may come up. No one hopes for bad things, but like they say:
‘Life is a hot pot of beans’
The Pettysave Autosave or Target save feature can help you automatically save a fixed amount of money monthly. This makes letting the money go easier on you as you just make the money and we help you save it. Here is a helpful guide on setting up an emergency fund.
5. Contribute to your retirement (SAVE!)
You can secure your financial future today by saving enough money to keep you comfortable when you’re old, wrinkled and no longer working. This might seem a little bit annoying especially if you won’t be retiring anytime soon but trust me,
‘Preparing for the rainy day always keeps you from getting drenched.’
So, you can use the Pettysave Locked In Save feature for your retirement savings and get a whooping 12% interest! Imagine how much more your savings would have increased once you retire…tempting, right?
‘You need to feel confident about your future, saving can help you with that.’
6. Save towards a Goal (SAVE!)
Hit your goals directly by using the Pettysave Target Save feature, whatever your target is. Some people always saves for a vacation every year. Yours could be for a new generator, flat screen TV or even…a weave. Just make sure you do this after you’ve covered all the essential bills.
7. Treat Yourself and Enjoy your success
Spoil yourself a little, you deserve it. You can do something fun to celebrate. With friends or alone, it is always a good idea to let loose a bit and pamper yourself after all the hard work that got you the pay raise in the first place.
Sit back and watch your savings grow when you subscribe to investing your savings via the Pettysave Investment feature.
9. Donate to charitable causes
Whether in cash or kind, you might want to make it a habit to spread some of your good fortune around. You will be a happier person for it.
10. Save! Save! Save!
Savings are amazing! Saving gives you options. Whether you’re quitting a frustrating job or waiting to get a new job, savings give you the flexibility to weigh your options and not rush into any choice due to desperation or over dependence on your next paycheck.
‘Don’t over-flex due to salary increase. Have some fun. But spend your extra cash wisely!’
If this article was helpful, share with someone else who may find it helpful too.
Oyin from Pettysave