You’ve just received a raise or a promotion at work. Congratulations! Now that you have a little extra cash flowing in, what should you do with a raise? Here are some helpful tips on how you can manage your increase in funds.
WAIT
Before switching anything up, wait until you receive your first few post raise paychecks. You may over (or under) estimate how much money will go towards taxes or what you actually get to take home.
FINE-TUNE BUDGET
Once you know exactly what your money situation is, adjust your budget accordingly. Maybe you can now allocate more funds to paying off debt, to your emergency fund, or contributing to retirement.
ADJUST RETIREMENT
Compound interest is your friend when it comes to retirement planning. Even an increase of 1% in your contributions could result in
LOOK AT TAXES
A raise at work could potentially push you into a higher tax bracket, causing your deductions and credits to no longer apply to you. Speak to your Human Resources department about increasing your tax withholdings.
BE SMART
It’s okay to treat yourself once in a while and you should, especially after doing so well at work. However, if you indulge too much, your mind can get used to that feeling and you have to keep buying bigger to get the same level of happiness. Don’t let a raise spiral into financial trouble.
