A lot of people assume that the only time they need to worry about budgeting is when they need to make a low-income stretch further. While a good budget can definitely help you to make more of your money, you don’t have to wait until you’re struggling for cash to use it.
A budget can be a valuable addition to your lifestyle at any time – even when you get a raise at work. When you’re earning more money than you’re used to, it’s easy to let that extra cash go to waste if you don’t know how to organize your spending properly. Fortunately, there are some tips you can follow to ensure that you’re making the most of your extra funds.
Understand Your New Take-Home Pay
There are two crucial aspects of your budget. The first is your “take-home” pay – the money you earn from going to work every week. The second is your monthly expenses. When you get a raise at work, the take-home pay part of your budget increases. This means that you can look at your outgoing expenses and figure out where you want to assign your additional money. You might want to put it toward travel expenses or that new home addition you have been wanting.
However, before you start making plans, make sure that you know exactly how much money you’re going to have. If you’re not sure, ask your boss about retirement contributions, taxes, and other things that might be taken off your wages before you get them.
Deal With Debt First
Most of us will have at least one or two loans that we need to handle throughout the course of our lives. You might take out your loan from an organization like HappyPenguin because you need money to rebuild your kitchen. You may borrow money to pay for a car that takes you to and from your new high-paying job. Whatever the reason for your loan, the best way to get a good deal is to compare your options and ensure that you’re getting the lowest interest rate.
It may also be a good idea to see whether your loan provider will allow you to pay back what you owe ahead of time if something changes in your finances. This way, if you ever do end up getting a raise, you’ll be able to get rid of your loans much faster.
Strengthen Your Emergency Fund
Once you’ve got your debts handled, the next place to focus is on your emergency cash. This is the money that you can turn to when you need to handle problems that you might not be prepared for. Imagine your boiler suddenly breaks down, or you find out that you need to replace your broken washing machine. Your emergency fund is what stops you from taking out yet another loan or breaking into your savings account. To ensure that you maintain a positive financial state, determine which is best for you: money market vs savings accounts. Then, your budgeting and saving will go to good use in the future.
Ideally, a good emergency fund will cover about 6 months of your living expenses. However, you can go over that number if you’re particularly cautious. Placing more money into your “just in case” cash could give you some crucial peace of mind when handling your finances.
Invest In Your Future
You’ve probably enrolled with some kind of retirement scheme at work anyway, but that doesn’t mean there aren’t other ways you can prepare for your future when you start to earn more cash. When you get a raise, think about what you can do to make life a little easier a few years from now. For instance, would it be worth talking to a professional about opening an investment account?
Can you pay something extra off your mortgage, so you have less to pay out in the long term? Investing in your future is an excellent way to set yourself up for long term success when things start going the right way for your career.
Do Something For You
When you start earning more money at work, it pays to do things that are going to be beneficial to you in the long term. Blowing all of your extra monthly cash on drinks and takeaways won’t get you far fast. However, it’s worth celebrating how hard you’ve worked, and how far you’ve come. Don’t be afraid to set aside a small portion of your income so you can treat yourself too.
If you’ve put money away into thinks like retirement investing, savings, and debts, and you still have something left over, buy yourself a treat with it. Do something that’s just for you. After all, you deserve to enjoy your success.