4 Ways to Save Your Raise
You got a raise, it might be a lot of money or it might be a small bump. What to do with this new money that will be coming in every pay-check?
Two words ‘save it’! There. That was a short blog post. And here I thought I’d be here longer, writing this.
I’m kidding! I should let you know the how and why, huh?
Ask yourself: “Was I able to live without this extra $20, $30, $100+ before I had it coming in?” If your answer is yes, then you shouldn’t let this new money sit, you should be putting it aside into something that will be affected in the long run. Because if you just leave it there, then you’ll eventually not notice it and you’ll think ‘oh hey I have extra spending money’, money that can be used for things that you don’t need.
Allocate your raise. Keep living the way you’re living. Basically, make it so that you don’t see your raise and you keep focusing on your current budget.
This blog post is here to show you that you can make the most of your raise, without even thinking about it!
4 areas to allocate your raise
BEFORE YOU DO THIS
Make sure you wait until you get your raise applied to your pay, and see what you have to actually play with. Your deductions love taking their cut of your raise, don’t forget this. When I get a raise I typically get less than half of what I was told.
1. Paying off your Dept
If you have dept you can put your raise towards this. Let’s say you received $40 added to your bi-weekly pay check, that’s $1000 a year that you can apply to your dept, the sooner you can get rid of your dept, the sooner you can take the money you use for this into savings. Especially if that dept has evil interest tacked onto it.
2. Plan a vacation
Yes, it’s a great way to save for your vacation without hindering on your current budget!
3. Work on building an emergency fund
If you don’t have an emergency fund, you should start creating one, what better way to do it then with money you’re not used to having, so making it go into a special savings for emergencies will be easy.
4. Put it into your RSPS
Yep you should be thinking of retirement, even at your age, you may be just starting out in the work force, or you’ve been working for a while, it never hurts to allocate money that you won’t see until your later years.
Keep in mind you don’t need to put all your eggs in one basket! I’m currently splitting my extra earnings into RSPS and my emergency fund, which can change in a year if I want to plan a vacation.
How to go about allocating your raise
The easiest way is to setup an auto save schedule with your bank; this can be done online. Just schedule it to come out of your account when you receive your pay check, that way when you get up and check your balance, everything has already be allocated and you see your old amount that you’re used to seeing.
You should be saving your raise, by either putting it towards dept, vacation, emergency fund or even your retirement fund. It’s simple to schedule your money with online banking, just make your money move the day you have your pay check comes in, that way it’s out of sight, out of mind. As little or as much as you received, in the long run it will make a big difference with you allocating your new money.