When You Get A Raise, Ignore The Extra Income For A Couple Months

When You Get a Raise, Ignore the Extra Income For a Couple Months

Getting a pay bump is one of the best occasions you can have in your career. Instead of immediately changing up your budget to fit your new salary, however, wait a couple months instead.

Photo by photographybanzai.

As personal finance blog Money Ning points out, the change you get in your salary may not be the same as the change to your actual paycheck. After taxes and other costs are accounted for, your raise may be lower than you expect. To get a decent handle on where your finances will be after the raise, wait a couple months before altering your budget:

Is it mandatory you immediately allocate an increase in your income? Are there any negative consequences if you don't? Absolutely not. Unless you have pressing needs, the wisest course of action is to sit on it for a while. Let a few months go by so you can get a feel for your new financial situation and carefully consider all your options. Waiting will often cool the impulse for extra spending and clarify what, if any, upgrades are necessary and beneficial. Seeing your funds accumulate is also a rewarding experience.

Unless you have bills you absolutely have to pay with that raise, waiting isn't going to be that bad. You'll build up a nice buffer, and you'll have a better idea of what your real life budget will be like before you start deciding where you'd like to spend your money.

Four Things to Do When You Get a Raise [Money Ning]


Comments

    Every second payrise, up your superannuation contributions.

      or home loan repayments

        Or that :) My thinking is that you start to get pay rises very early on in your career, so get into the habit of putting some of it away for the long haul. Both super and mortgage repayments do that in one way or another.

        As most 20-somethings aint gonna be having a mortgage though, putting it into super makes sense, and starts to build good habits early on.

          Yep. I've been lucky in that in my industry (higher education), many employers have "we'll match X% additional super if you contribute y%.

          Kinda forces you to save.

    A handful of years ago i reached a salary level that was 'enough' for my living and expenses. Since then, every salary increase goes straight into my savings. It helps that i live the trifecta, thouh - no husband, no mortgage, no kids

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