How NOT to Spend Your Raise
May 1, 2019
We’ve seen it happen time and time again…you have your glowing annual review and your hard work is rewarded with a salary bump or one-time bonus. Your first thought? Treat yourself with that handbag you’ve been eyeing or those new golf clubs you can’t live without. It’s a slippery slope. Suddenly, you’ve spent thousands of dollars on unbudgeted item, when the money could have been set aside for your long-term financial goals. Here’s the thing. You lived without that money before, so you can do it again. Here are a few tips to avoid this all-to-common spending mistake:
- Redirect that “extra” income straight into a savings account. Did you know that you can split your direct deposit into multiple accounts? Point your “old” salary amount at your spending/checking account, and the “excess” salary at an account that you designate for short or long term savings.
- If you don’t trust yourself to leave a savings account untouched, then another good idea is to direct that excess income toward your 401k, IRA, or other retirement account.
- Pay off a debt with the new found income. Credit card balance? Student loan? Get rid of it! It’ll have the net effect of decreasing your monthly expenses.
Don’t be the person who looks back on those weeks and months following your raise and/or bonus and say to yourself “where did it all go?” Have a plan for the money before it even hits your bank account.