Getting a pay raise at work is a great achievement. It justifies how you’ve been doing your job and makes you feel appreciated in your company.
When you get a pay raise, always think of how you can benefit from that extra cash. As you enjoy the success of your hard work, also remember to continue improving your net worth.
Here are the criticalthings you should think of doing when you get a pay raise.
Review Your New Take-Home Pay
Don’t start spending your money immediately after receiving a salary increase. Assess your current financial situation and make plans for your future financial security. You need to look at how your salary increase is going to affect your paychecks.
It doesn’t mean that you’ll have additional take-home pay when you get a salary increase. You have to take note of any tax withholding or any deductions coming from your paycheck.
You need to factor in things like your health insurance, any membership, plus commuter benefits.
Before you make any monthly adjustments to your budget, determine your net pay increase and then subtract your old paycheck from the new one. This will help you know whether to adjust your budget or leave it as it is.
Take Care of Your Debt
Use your extra cash to pay off debt. Remember, the best way to build your net worth is topay any debtweighing you down. Settle that payday loan immediately to avoid late payment penalties.
Ensure you remain debt-free before attending to other things. This will allow you to have more freedom with your money.
Also, make sure you get rid of high-interest debt fast because the interest can take all your hard-earned money.
Create and Build an Emergency Fund
Create an emergency fund if you don’t have one. But if you have an existing emergency fund, build it using that extra money. This is a great way of putting your extra salary into work.
The emergency fund will be there for you whenever you face life situations such as job losses or short illness. Your emergency fund covers three to six months of your living expenses.
You can place it in your savings account so that you can access it in case of an emergency.
You are the one who has worked hard for that extra salary, so don’t be mean to yourself. Set aside a small portion of your extra income and give yourself a treat.
You can buy yourself a gift or open a separate account to save for vacations. You can even change the look of your home by purchasing new furniture or electronics.
Don’t Forget Your Retirement
Don’t forget your golden years, regardless of your age. Add something to your retirement account. Ensure you increase your monthly contribution towards your retirement fund.
It doesn’t matter how much, but it can impact the stability of your future financial being. A rich retirement account will see you living a comfortable life when you’re too old