5 Ways To Save Money After Getting A Raise

Getting a raise is a good thing for any employee. It means you have more money to use to better your life.

However, most people think that this is the time to completely change their lifestyle, they buy fancier clothes, big cars, move to an expensive house and many more.

Financial experts say that this should not be the way to go the moment you get a raise. Such behaviour or change in lifestyle can lead to poor money habits which will then mean that even with your salary increase you are not getting wealthier.

So here are some tips to help you save after getting a pay rise.

1. Stick to your budget.

Do not change the budget you have been working with. Even if you now earn almost double what you previously did.

“It is a common mistake for people to expand their budgets to fit their new salary. I do not advocate for this because it adds unnecessary expenses on to your budget. Sticking to that budget restricts you from overspending,” says Boniface Njuguna, a Financial Analyst.

This will also ensure you have more money to save which will benefit you in the end.

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2. Save

I am sure you have heard this countless times. Saving is one way of ensuring financial prosperity. We all want to be rich and saving is a way to start.

Having savings also ensures that in the event you lose your job, you have some money to push you through until you get another one. You do not want to have to move out because you could no longer pay rent.

According to Alison Green, a job search and career adviser with HR experience, most people increase their expenses once they get a pay raise and as a result do nothing to ensure their financial security.

So the more you earn the more you should save.

3. Pay off debts

Debts are a huge hindrance to financial success this is because your money is always going to someone else. With a pay raise you can afford to put more money into paying off your debts and as such pay them off faster.

Take for example your HELB loan, if you have been paying 1000 every month, with a pay increase you can increase the amount to around 3K. This will ensure that your repayment period is shorter and afterwards you can use that money to better your life.

4. Invest

Other than just saving money, investing is also a great way to ensure financial success. With a little more money at your disposal every month you can afford to invest your money in businesses, real-estate, land etc.

Do not just let your money sit idle in the bank after saving enough you can invest that and get an extra source of income in the process.

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5. Avoid expensive hobbies

Yes you earning more money but that does not mean that you can now start spending all of it in coffee joints, expensive restaurants and the like.

While this will make you appear cool, Andrew Makhulo, an Accountant at MGK Consultants says that it will leave you broke.

Instead find cheaper alternative hobbies or ways you can reduce how much you are spending on such hobbies.

For example, instead of eating out every day, you can reduce this to once a week or once every two weeks. That way you can still go to your favourite restaurant and not spend as much.

It is important to remember that earning more money does not really translate to wealth unless you know how to manage it properly.

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Do you have any other tips? Share them with us in the comment section below.