Money Moves: 5 Steps to Take When You Get a Pay Rise

You just got a pay rise? Congratulations! You now have an excellent opportunity to start making some smart financial decisions. Whether your pay rise is small or large, it’s vital to use this extra income wisely to improve your financial situation. 

Here are five ways to make the most of your pay rise:

1. Revisit Your Budget

When you get a pay rise, the first step is to revisit your budget. Look at your current earnings and compare them to your expenses. Is there room in your budget to increase your savings, pay off debt, or invest in your future?

If so, great! If not, you may need to adjust your spending. To ensure you get the most out of your budgetary refinements, consider consulting with a financial advisor and typing “best tax agent near me” into Google. You’ll get guidance on how to make informed decisions regarding your newfound riches. An accountant will help you ensure you’re budgeting appropriately for any increase in your tax obligations that may arise from your pay increase. 

2. Increase Your Savings

Once you’ve revisited your budget and made the necessary adjustments, the next step is to increase your savings. A pay rise is an excellent opportunity to save money and build an emergency fund. 

Keep at least three to six months’ living expenses in your emergency fund. Consider contributing more to your 401(k) or IRA as well. If you’re not contributing, now is an excellent time to start. If you’re planning to buy a home in the future, you can also use your extra income to save for a down payment.

You may want to enjoy a vacation, purchase a new car, or pay for a certification course. Whatever your goal is, use your extra income to save up for it and level up your life.

3. Pay Off Debt

Another savvy financial move to make when you get a raise is to pay off debt. If you have credit card debt, student loans, or other outstanding debt, consider using your extra income to pay it off faster.

Paying off your debt will allow you to save on interest charges and improve your credit score. If you have multiple debts, consider using the debt avalanche or debt snowball method to pay them off.

The debt avalanche method involves paying off the debt with the highest interest rate first, while the debt snowball method involves paying off the smallest debt first. Consult with a financial advisor o to determine the best approach for your situation.

4. Invest in Your Future

Investing in your future is another excellent use of your extra income. Consider investing in a retirement account, such as a 401(k) or IRA, or opening a brokerage account to invest in stocks, bonds, or mutual funds.

Investing can help you build wealth and bring you one step closer to your long-term financial goals.

Again, before you start investing, you must research and consult a financial advisor who’ll help determine your risk tolerance, choose appropriate investments, and create a diversified portfolio.

5. Treat Yourself

Lastly, don’t forget to treat yourself! While using your extra income wisely is essential, enjoying the fruits of your labor is also necessary.

Consider using some of your extra income to do something fun or rewarding, such as going out to dinner, taking a vacation, or buying something you’ve wanted for a while. Just make sure you’re not overspending and that you’re still sticking to your budget.

With careful planning and wise financial moves, you can use your pay rise to build a secure and prosperous future for yourself and your family.


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