Most people live to their income. As much as we swear we won’t,
whenever we get a pay raise, we tend to accumulate that money into our
lifestyle as opposed to making some big financial advances with it. Our
lifestyles becomes more expensive as our income increases. So why not
buck the trend this year and make the most of your pay raise. It’ll save
you money in the long run. Here’s how, inspired by Five Cent Nickel.
Pay Off The High Interest Card
If you’ve got a couple of credit cards
and are finding it hard to stay on top of the repayments, use your pay
raise exclusively to knock off the highest interest card. It’s a
concrete goal and will not only help you save actual money, in the form
of interest, but has a motivating effect when it comes to your other
cards. It’s a great financial move and will save you significant money
over the course of the repayment.
Get An Emergency Fund
Emergency funds are as unsexy as things get. They’re the completely
no-fun option when it comes to personal finance, and I can understand
the feeling that they’re the last thing you want to do with your
hard-earned raise. Unfortunately, no one likes an emergency fund until
they have an emergency. Save yourself the heartache and put your pay
raise into an emergency fund. It won’t earn you any money, but it could
save you a huge outlay in the coming years, whether a health concern,
job loss or major accommodation issue. Try and live on your previous
income and put the raise into your emergency fund.
Just Super
If you’ve already got an emergency fund and pay off your cards at the
end of every month, you’re doing brilliantly. Now might be the time to
think about putting some extra money into super. If you can invest your
raise into your voluntary contributions, you’ll earn some money by the
government matching your contribution up to $1,000. It’s also all taxed
at 15%, which is as low as it gets when it comes to investments. On top
of which, that extra money can earn compound interest and convert your
retirement from workable to comfortable.
Insure Thyself
Insurance premiums are a cost we often delay. We probably have the
basics, but if you’ve got a spare bit of money suddenly coming into the
bank account, why not think about investigating whether your insurance
has you completely covered? Home and contents insurance, life insurance,
disability protection. You need to know where you stand, and can think
about whether you need further cover once you’ve got your raise.
Fun Money
I read an article recently about the role of fun money in
relationships; the small amount of money that each spouse has and can
spend with no questions asked. Let’s take that wider, and invest in fun
money for each of us. I’m not suggesting spending your entire raise on
concert tickets, just using a small proportion of it every month as
money you spend without guilt. You earned it, you should be able to
spend some of it on your
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