Congratulations! You’ve received a raise As happy as you are after getting that bigger salary, it’s important that you take a step back and map out a plan allocating your money.
Lots of you will use a raise as more wiggle room with your spending, or as an excuse to purchase shiny, new expensive toys.
But, it’s more critical that you consider ways to create a more comfortable financial situation for yourself both now and years into the future.
As your wealth starts to grow, consider these four money saving measures:
1. Re-evaluate your spending habits
Earning more money means that it’s important now, more than ever, that you’re making wise spending choices.
Check your bank statements and see where you’re spending more than you should. Take your mortgage, for example.
You’ve been making routine payments for several years, so you could be eligible for a refinance, meaning you will be able to reduce your interest rate and monthly mortgage payments.
On a smaller scale, you can find ways in your everyday life to cut back on spending, like bundling your subscriptions into one lower price or choosing generic over branded products.
The more you save each month, the more impactful your raise will be.
2. Adjust your auto-savings
Taking in more money from each salary doesn’t call for a shopping spree. You need to be smart about the extra money you get each pay day and a wise way to do that is to put it into your savings.
Since most employees utilize direct deposit, you can probably also choose the option to set up auto-deposits into your savings.
Even if you already do so, be sure to increase the amount after a raise so you can build up your emergency fund.
Experts recommend that 20% of your income should be saved. However there is no one-size-fits-all solution as everyone’s goals will and do vary.
Talk to a financial advisor to determine your financial goals and how much you can afford to put away for a rainy day.
3. Increase your retirement contribution
Retirement is a major factor to consider when planning your savings. Most of the time, companies will have programs in which you can dedicate a small percentage of your income to your retirement fund.
That percentage will be matched to a certain degree by your employer. Check with your company to see if this option is available to you, and if not, there are individual retirement accounts to utilize.
Either way, you should start preparing for retirement as early as possible. Your hard-earned money and years in the workforce can help you live a comfortable life with less concerns about money in your later years.
4. Keep developing your professional skills
The connection between improving your skills at work and money management might be hard to make at first.
But the fact of the matter is that becoming a better, more knowledgeable employee can improve your chances of getting a raise, putting more money in your pocket at the end of the day.
Besides, your professional development is what got you that raise in the first place. If you’re not trying to prove yourself in the workplace, you won’t gain access to these opportunities for promotions and pay raises.
That said, find out the most sought after skills in the workforce to stand out amongst your co-workers and you’ll be well on your way to the top of the ladder in no time.
It’s important to set further goals as soon as you receive your first raise so that you don’t waste your money.
Make sure you’re allocating your extra money to funds that build wealth and set you up for a comfortable life down the road.
This article first appeared in Jobstore. First launched in New York, Jobstore is one of the largest job distribution platforms which offers services in over 10 countries.