If so, congratulations!
It’s a great feeling to receive that kind of recognition and, of course, a raise will lighten your financial load.
Or will it?
3 Ways You Need to Adjust Your Budget After a Raise
We’ve all heard stories about people who won the lottery only to turn up penniless within a year or two. While we hope your raise was a substantial one, it probably wasn’t in the realm of millions of dollars.
Nonetheless, the point is that more money doesn’t necessarily equal fewer problems. If you don’t adjust your budget accordingly, that raise may not make much of a difference at all. So here are three easy ways to do so.
1. Review Your Current Budget
It’s always a good idea to review your budget on a regular basis, which is why we advise tracking your spending with an app.
That said, now that you suddenly have more money, you want to check your budget for any problems you need to address.
For example, when looking over their budgets, many people find that they’re overspending in a certain area. Larger paychecks are only going to make it easier to do so, which can quickly add up.
So, before you adjust your budget, take a moment to simply review it.
2. Save and Invest More
This is really easy advice to ignore, especially if your finances seem fine at the moment.
After receiving a raise, your mind probably went to whatever’s on your wish list. Maybe it’s an upgrade to your living situation or a vacation you’ve always wanted.
There’s nothing wrong with celebrating your good news, but if you’re not struggling daily, then that raise could be used to increase your nest egg and save for retirement.
Of course, if you have debt, now would be a good time to start aggressively paying it down.
3. Buy Something You Really Want
Again, feel free to celebrate your new raise. What’s the point of working so hard if you don’t get to enjoy it?
The only caveat to this advice is that you not let it become a regular part of your budget. Don’t go out and buy a new car (unless it’s necessary) because that payment is going to hit your budget once a month for years.
Pick something you’ve been putting off until a moment like this and then enjoy it guilt-free. After that, though: savings and investments!
Get Help from Financial Professionals
Finally, one really good use for your raise would be investing in professional help for your budgeting and long-term investing strategies. At Mooney Lyons, we love working with clients to ensure that they are getting the most from their hard-earned money.
Contact us today and let’s talk about your unique financial goals.
The opinions voiced in this material are for general information and are not intended to provide specific advice or recommendations for any individual. Investing involves risk including loss of principle.