You got a substantial raise and you are already wondering what you can do with the extra money. Well, even if it doesn’t sound exciting at all, the best thing you could do is save them and keep living your life the way you used to. We’re not saying you are not allowed to treat yourself every once in a while. However, try to avoid the most common financial mistakes people make after getting a raise. Because we want to help you avoid them, we have prepared a list of 4 of them that we’re going to explore together today. Let’s take a look!
4 Most Common Financial Mistakes You Could Make After a Raise
1. Purchase Something Extremely Expensive
We all have our bucket list of things that we would like to purchase but we find too expensive at the moment. Whenever you get a raise, you might be tempted to think now is the right time to make that purchase. What we advise you to do is wait for a while and see how this raise affects your monthly income. After a couple of months have passed and you took into account all of the costs that will follow the purchase, if you still think it’s a good idea, then go for it.
2. Not Save Any Money
Since you have some extra money now, why not put some of them aside? You can use them in case of an emergency or thinking about your retirement. Usually, if you don’t make the decision to save some money, you will end up spending more than you normally would. At the same time, it will feel like nothing has changed. That is because the purchases will most likely be small and you won’t realize you’re making them. Start thinking about the future and put some money aside, don’t only think about your day-to-day expenses.
3. Not Revise Your Budget
Everybody should have a budget plan that allows them to manage their finances properly. After all, you don’t want to stray away from the path you’re interested in. However, what most people don’t realize is that when you get a raise and you suddenly have more money, you also have to revise your budget. Think about what the extra money means and how you’re going to spend it. Are you going to invest them in a retirement fund or not?
4. Apply for Credit
This may sound like a strange thing to do when you suddenly have more money. However, we can guarantee you that it happens more often than you’d think. The logic behind applying for a credit when you earn more is that you can always pay for it later with your next paycheck. That allows people to spend more money on a day-to-day basis. The mistake here is that a credit can be a difficult thing to dispose of. So why not save money from your new paycheck for a couple of months and give up the idea of applying for a credit?
We hope these 4 financial mistakes that most people make after a raise have taught you that you should be extremely careful with your finances even if you’re earning more money now.
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