What to Do When You Get a Raise?

If you have earned a sizeable raise in your salary or landed up in a new job that has considerably bumped up your salary, then you should utilize your new earning power by investing it for greater returns instead of spending it all. Saving is easier said than done, so you need to plan on how to spend your salary so that you can get more money out of it for investment purpose. Here are our tips to spend the extra cash:

Set Goals:

To start saving your extra cash for something like a home, or buying an additional property, you need to set goals for yourself so that you can avoid spending the money incessantly. When you set a goal for yourself you will get the bigger picture and save up for that.

Divert the extra cash to Savings:

You probably don’t even need to spend the raise that you got, even though you might be tempted to do so. If you reduce the accessibility of this extra cash, then you are setting up an extra fund consisting of this cash that you are siphoning regularly from your salary. By hiding this cash, you are setting up an emergency fund that you can access when you really need the money.

Education:

A wide array of professionals courses are available online and can consider investing part of your raise to learn something new and broaden your horizon. Of course saving is wiser than spending but sometimes investing in one’s education by a degree or a professional certification course will surely increase your long-term earning potential. Hence such spending can be considered as an investment.

Retirement:

A time will come when your regularized income will stop flowing in, the age of retirement. One of the best things that you can do with a raise is to allocate it towards your requirement. If you start allocating funds for your retirement since from early on, you will have a big corpus by the time you reach the age of retirement.

Emergency Fund:

It is extremely essential that you have a separate fund for emergencies. It is difficult to predict what might happen in the future and you might run into unforeseen events. Examples of such emergencies might vary from loss of a job to a gargantuan medical expense. Putting aside your raise for a rainy day will help cover almost all sorts of emergencies without any hitch. You can also set up an automatic savings plan so that you don’t have to remember to transfer the money regularly. This will also help you avoid any sort of temptation that you might feel to spend your money incessantly.

For someone who works hard for your money, it is only natural to spend it on things that you like for instant gratification. However, before you do so, you should think about your future and how you can align yourself with your long-term goals. Before splurging on anything, save your raise for a better tomorrow!