Make More, Spend Less

How to not blow your first big raise

So you got the big raise. Congrats! You worked hard, put your time in and you deserve it. Now, about spending it… Don’t. It’s going to be tempting to bump up your expenses now that there’s a little more wiggle room in your budget, but try your best not to fall into this trap. How can you avoid the so-called “lifestyle inflation” now that you’ve landed a big raise? Here are some tips.

Don’t Spend It Before You Make It. This might sound obvious, but wait until you actually get the raise to understand how it’s going to impact your budget. You might desperately want a new TV in the months prior to the raise, but hold off. There’s no reason to spend money you don’t have.

Increase Your Savings. Instead of spending more once you make more, deposit that extra money into your retirement savings accounts — automatically. As Marketwatch reports, it is much easier to live below your means than live about them, and have to cut back when something unexpected happens down the road.

Revise Your Budget. Now is the time to revisit and revise your budget. Make sure your spending/saving still aligns with your long-term goals. As always, look for areas where you can trim the fat and stick that money into savings. Make note of how your raise (and the actual, take home portion of it) impacts your data, then adjust accordingly.

Opt for short term celebrations. We’re not saying you shouldn’t celebrate the raise, you should! However, consider a one-time, short-term celebration instead of a long-term one. That way once the celebration is done, it’s back to business as usual. Maybe finally book a reservation at that fancy restaurant you’ve been wanting to try. Do this instead of using your raise to move into a new apartment, as that money change will impact you for years to come.

Chris O'Shea

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