The concepts of the self-made man and overnight success have begun to unravel as professionals start to recognize the contributions of others. After a big win, it’s tempting for hard chargers to simply set the next goal but allow yourself a moment of reflection. Consider what you learned from the victory and who helped you along the way. Then, thank them and commit to repaying the kindness. Mentors move mountains.
When you receive a promotion or raise make sure you adjust your investment and retirement plan. Take advantage of this increase and put more into your 401k or IRA account. Pay down high interest debt and build up your emergency savings with 3-6 months of expenses. If you have those taken care of, set-up a non-retirement invest account to accumulate funds for the mid-term. Review your plan with a Financial Advisor to make sure you are making suitable financial decisions.
Once your income goes up, you will probably feel inclined to spend more, because you will likely afford more. For that reason alone, you should take things slowly or you might end up in debt even though you’re now making more money. Lack of planning, more than lack of money, is what leads to debt. When you think you have more and start spending more and before you realize your bank account is in the red. The first step is to start a new budgeting plan, in addition track money in and money out. Know what expenses are, then compare how much you still have left at the end of the month and how much room you have if you’re thinking of spending more. In the end, it’s about avoiding bad money surprises. Avoid the need to resort to credit cards to cover the gap of what you still need to pay until your next paycheck. Name: Andrei Vasilescu Website: https://www.dontpayfull.com/ Title: Co-Founder & CEO at DontPayFull
While the emphasis is on paying off debt and other financial goals, a raise should also improve your quality of life. A better quality of life often makes you happier and healthier, making it an excellent way to utilize the promotion. You can get a gym membership, learn a new skill, get or remove a tattoo, refurbish your car, or even see a therapist. Whatever you choose should make your future much more pleasant. This activity can be your way of celebrating yourself and acknowledging your hard-earned achievement. Take the opportunity to recognize your accomplishments.
Once you learn what your new level of income is, you should review your financial plans to determine how much you want to save and spend each month going forward. It can feel tempting to want to spend your increased income on anything you please, and perhaps at first you may want to treat yourself as a reward for your raise. However, you do not want to be financially irresponsible in the long run.
We are all battling inflation right now. A nice raise at work can bring you some relief. But don't give in to the temptation to reward yourself too much. Often someone will look back and realize they can't save any more today than they did five years ago when they earned half as much. Some call it lifestyle creep, demonstrated by people who always find ways to spend more when they earn more. Those that get a pay bump are blessed with the opportunity to save more rather than spend more. It's a potentially life-changing moment that could allow you to make significant progress toward your goals. Instead of spending more, save more in that 401(k), HSA, or college fund. Pay down some of that credit card debt. It's a tactic that is very under-appreciated, and often the difference between financial success and financial disappointment. So instead of rewarding yourself today, reward your future self.
Certified Public Accountant and Author at Young and the Invested
Answered 4 years ago
After getting a raise in pay during a promotion, try to utilize these additional funds towards moving yourself in a better financial situation. Plan out your new budget and focus on cutting down your student loans, credit card debts, or additional payments. High interest debts should take priority, even over smaller debts you can knock out more easily. Of course you should celebrate this promotion and reward yourself, but after that try to prioritize improving your finances over any lavish, drastic spending.
One of the top things you should do after a raise is to update your retirement savings and contributions. By updating this right away you can make sure you are putting away the right amount for your future!
In a world where everyone is busy getting ahead of one another, people forget to take out time for themselves. And this is what takes away the fun from their lives. Celebrating your promotion or raise at work will double the happiness of that moment. I never miss celebrating these small achievements of mine. Yet, celebrating is fine as long as you remember that "great opportunities bring greater responsibilities".
If you have credit card debt, student loans, or any other household debt, this is the ideal time to wipe out your debt. You will save money on interest and be able to save for your future goals. The most important thing is to not splurge on a big-ticket item that could put you deeper into debt. Maintaining your current standard of living and paying down debt can help ensure that you see the benefits of your increased income.
When you get a promotion for your high achievements, voice your determination to keep doing your job well and drive more growth for the company. Promotions are a way to stimulate workers, keep them motivated by allowing them to tackle more challenging tasks, and show them appreciation. Tell your boss or manager that you are grateful for the recognition and that you will do your best to support the company's vision and goals.