Congratulations! Getting a pay rise is an exciting moment, no matter what stage of career you’re in. But, while it’s tempting to go out, celebrate, and spend it all, there are a few things you’ll want to do to make sure you’re really making the most of all that lovely extra money you’ll be getting from now on.
Only spend what you usually do – at first
Once your pay rise has been confirmed, the worst thing you can do is do a Viv Nicholson and ‘spend, spend, spend.’ The best thing you can do is wait and see how much it all amounts to when you get your pay cheque through. Getting a little extra in your pay packet also means you’ll be paying out more in taxes, pensions, and so on. Stick to what you’re used to spending prior to the pay rise, and you can be sure that you’ll have enough to cover the essentials – at least for the initial month.
Make a new budget
Maintaining a budget is, as we often say, critical to staying on top of your finances. When you’ve got a little more in your pay packet, it means you’re going to want to reassess how much extra you’ve got coming in and where it’ll be best spent. Sit down, crack open that budgeting app or spreadsheet (or start one, if you haven’t already) and detail everything: your newly acquired income, those additional – and, unfortunately, inevitable – outlays, and any adjustments you may want to make, such as…
Get on top of your out-goings
It’s tempting to splurge straightaway, but be sensible and you’ll enjoy that extra dosh a lot more in the long run. Rather than spending everything, one of the first things you’ll want to do is pay off your debt – all of it, if you can possibly afford it, or upping your contributions if not. You should also consider any sort of investments you’d like to make in order to make your money go further, or if you’re feeling generous, any charitable donations you want to make. And make sure all of these are added to that all-important budget.
So, you’ve got all that extra money lolling around in your bank account – leave it there. Or, at least, pop it into a higher interest rate savings account. Saving is absolutely vital, particularly these days, so now is the perfect time to put to good use that money you never had before. Build up some proper savings or even just an emergency fund for those unforetold out-lays that life likes to throw at us. Ideally, create a standing order with your bank – making sure you’ve properly budgeted and you’re only saving what you can afford – and forget about it until you really need it.
All right, you’ve done all the sensible things. You’ve budgeted, saved, cleared some debt, and made sure you know exactly how much your take-home pay will be. So, now – finally – you can start to enjoy your money. Treat yourself. After all, you’ve quite literally earned it.