Everyone likes a raise in their pay. However, it gets quite difficult to maintain and manage the increased amount wisely. A pay increase is welcome news, but what should you do now to make the most of it? Here is what to do when you get a raise:
Establish Your Cash Reserves
Consider transferring your raise to a money market or savings account with convenient access if the news that came as a surprise to you or your weekly shopping spending makes you uneasy. This will ensure that you still access your money and earn a little interest in it if you require it for an accident or unforeseen need.
Additionally, you can set aside money for a possible purchase, such as a down payment on a home or a brand-new vehicle. Opening a second, purpose-driven savings account can motivate you to increase your balance more quickly and prevent you from automatically withdrawing funds.
Higher the TSP Contributions
How recently have you reviewed your TSP contributions? A raise is an ideal opportunity to assess and increase these amounts to utilize your increased money better. Consider investing your full raise in your TSP if you need help paying your bills.
With a cappuccino here or a new pair of footwear there, raises frequently vanish into thin air. A wonderful tip to help ensure your money is preserved is to direct the money into your TSP promptly. TSP’s yearly contribution thresholds may vary annually. Because of this, you could make more savings this time than you did last.
Make New Goals After a Raise
Being alert and paying close attention to where your money is going are the keys to making good use of your raise. The start of a new year and a new paycheck is the ideal time to assess your finances and make sure you are fully aware of your income and spending habits.
Evaluate your monthly budget after receiving your first paycheck and make any necessary adjustments to account for your increased revenue. After that, examine your spending honestly and make any necessary updates to those line items. You will gain crucial knowledge from this to plan your financial year effectively.
If the planning seems complicated or intimidating, it’s time to consult with a financial consultant to understand better where you stand and what measures you should take to reach your goals. Making the most of your money today and having peace of mind regarding your retirement plans are possible with the correct financial strategy.
Clear Your Debt When You Get a Raise
You need to send out credit card bills. Additionally, you can utilize your raise to make larger monthly payments on such debts to pay them off sooner. This method is equally effective for repaying a mortgage or auto loan. Add the monthly raise amount to one of your loan payments rather than putting it toward savings.
Try using a debt estimator to see how much you can save by making a small monthly payment if paying off debt doesn’t seem like much fun. A good way to use that raise, especially if your retirement account contribution limit has already been reached.
Managing your salary raise and utilizing it correctly is the key to a financially balanced life. You should consider the above suggestions to make the most of your raise. If you are looking for skilled financial assistance, contact our Armed Forces Benefits Network experts and get professional help to manage your finances.