When you’ve been working hard toward a career and you’re starting to progress, you can expect a pay rise. When that happens, it’s tempting to start increasing your spending and buying luxuries with that money, but you’ve got to be careful.
It’s ok to treat yourself a bit, but you should also see this as an opportunity to put yourself in a better financial position in the long term. If you’ve recently been awarded a pay rise, these are some of the most sensible things to do with the extra money.
Pay Down Debts
It’s easy to get into debt, but it’s a lot harder to get out. So many people find themselves trapped in a cycle of debt because they simply don’t have enough spare money each month to pay down those debts quickly. But now that you’ve got that extra money, you’ve got an opportunity to clear that debt a lot faster.
If you’re just paying the minimum repayment each month, that’s only really covering the interest and not actually paying back the debt. It’s best to pay off as much as you can realistically afford each month and just pay it off as quickly as possible. Once you’re debt free, you’ll have a lot more expendable income each month and you can use that to buy luxuries with.
If you want to secure your finances for the future, investing your money wisely is the best way to do it. If you can make some sensible investments now, you’ll find it a lot easier to help your children out in later life if they want to go to university or help pay for their wedding. It’s also important that you have enough money to fund your retirement comfortably and investing your money can be a big help.
Property investments are one of the most popular ways that people are using their money at the minute because you can see some good returns. If you think that you can realistically afford to cover the cost, you should try to find a small house or an executive condo for sale in a good area. You can bring in money by renting it out and that will cover the mortgage plus a little extra.
You could also look into stocks and shares, but it’s important that you speak to a financial advisor first because it can get pretty complicated and you don’t want to make bad decisions with your money.
Upgrade Your Home
You should consider your home an investment in itself and if you’ve got a bit of extra money, you should make some renovations to it. Doing work on the house will make it more comfortable for you and your family but it will also increase the value a lot. That means you’ve got more valuable assets to pass on to your children and if you need to borrow money against the house for any reason, you’ll get a lot more.
Put Money Into An Emergency Fund
A lot of people get into debt because they get hit with unexpected costs and they don’t have the money to pay for it, so they have to borrow. But having a good emergency fund can help to prevent that.
It’s always a good idea to put money aside each month so when the unexpected does happen, like a broken down car or urgent home repairs, you’ve got a buffer there to pay for it. However, that’s not always possible if you’re already struggling to cover the rest of your bills. But if you’re getting paid a bit more now and you have more spare money, you should start trying to put more aside in your emergency fund.
It’s important that you actually get to enjoy the results of all of your hard work so you should treat yourself with some of that extra money. It’s important that you sort out all of the sensible stuff first to make sure that your finances are secure, but after that, you should start saving up some money for things like a holiday or a new car.
It’s also worth adjusting your budget now that you’re bringing in more money. You can afford to spend a bit more on luxuries like eating out each month, just make sure that you’re doing this after contributing to savings accounts and paying down debts etc.
It’s easy to get carried away when you get a pay rise and just start spending it all, but you should follow these steps instead.