{"id":1459,"date":"2021-07-26T16:28:20","date_gmt":"2021-07-26T20:28:20","guid":{"rendered":"https:\/\/www.skypointfcu.com\/wph\/workarea\/?p=1459"},"modified":"2022-03-31T12:39:06","modified_gmt":"2022-03-31T16:39:06","slug":"congrats-on-your-raise-heres-how-to-keep-it","status":"publish","type":"post","link":"https:\/\/www.skypointfcu.com\/wph\/workarea\/blog\/congrats-on-your-raise-heres-how-to-keep-it\/","title":{"rendered":"Congrats on Your Raise. Here\u2019s How to Keep It"},"content":{"rendered":"\n

A few years ago, my best friend said something that really stuck with me. The gist was this: It doesn\u2019t matter whether you make $25,000 or $100,000 a year \u2014 you\u2019ll still feel like you don\u2019t have enough money.<\/p>\n\n\n\n

That\u2019s easy for someone making $100,000 to say, I thought at the time.<\/p>\n\n\n\n

But here\u2019s the thing. She was right. In the span of a few years, I went from being an intern to a legit professional. My salary doubled, but I was still living paycheck to paycheck.<\/p>\n\n\n\n

The reason? Lifestyle creep.<\/p>\n\n\n\n

\u201cPeople who see their income increase, a lot of times they\u2019re just not that much better off,\u201d says Brian Madgett, head of consumer education at New York Life. \u201cBecause as your income changes, you give yourself permission to spend more money.\u201d<\/p>\n\n\n\n

You buy nicer clothes. You upgrade your living arrangements. You go on vacations. You pay for conveniences.<\/p>\n\n\n\n

That permission slip can quickly lead to debt, especially if you give yourself the green light to spend beyond your means.<\/p>\n\n\n\n

\u201cYou often see an increase in consumer debt when that salary increases [because] that increased salary gives someone the confidence to say, \u2018Hey, we can buy this. We don\u2019t have the money in the bank right now, but we\u2019re confident that over time, we can pay that off,\u2019\u201d Madgett says.<\/p>\n\n\n\n

Jumping off that roller coaster of large spending, new debt, large spending, new debt can be difficult. But curbing lifestyle creep in your 20s and 30s, when you\u2019ll likely see your biggest wage increases, can give you more financial freedom<\/a> down the road.<\/p>\n\n\n\n

Don\u2019t worry. No one expects you to have three roommates and live off ramen noodles for the rest of your life. Some lifestyle upgrades are OK. These tips will help you keep it from going too far.<\/p>\n\n\n\n

Count your money<\/strong><\/p>\n\n\n\n

When you\u2019re broke, you keep a close eye on every dollar. But that vigilance can fade when you have some cash to spare. Suddenly, your checking account is tapped and you have no idea where the money went.<\/p>\n\n\n\n

Tracking your spending<\/a>, via an app or an old-fashioned spreadsheet, will keep you tuned in to where your money is going. Then you can make informed decisions around your spending, like whether you really want to shell out that much money on takeout.<\/p>\n\n\n\n

Plan for indulgences<\/strong><\/p>\n\n\n\n

Tom and Donna (RIP \u201cParks and Recreation\u201d) know not to \u201cTreat Yo Self\u201d every day. Instead, make it special. And make it part of your plan. Carve out room in your budget for fun and set aside funds for things like vacations, concerts or big purchases.<\/p>\n\n\n\n

You\u2019ll enjoy indulging more when you know you have the money set aside, Madgett says.<\/p>\n\n\n\n

\u201cSome of the most successful people, lifestylewise \u2014 the ones who don\u2019t have any stressors around money \u2014 bucket out money for all the things they want to spend on,\u201d he says.<\/p>\n\n\n\n

Keep pace with savings<\/strong><\/p>\n\n\n\n

If your income (and spending) increases, your savings should, too. This applies regardless of lifestyle creep, because living generally gets more expensive as you get older \u2014 you might buy a house, you might have babies, you might run into medical issues or have to care for an aging parent.<\/p>\n\n\n\n

So get in the habit of bumping up your savings as you go<\/a>.<\/p>\n\n\n\n

\u201cSet up regularly occurring automatic transfers to your retirement account, emergency fund and any other savings accounts,\u201d says Logan Allec, a certified public accountant and owner of personal finance site Money Done Right.<\/p>\n\n\n\n

And increase those contributions every time you get a raise. Otherwise, your savings might not keep up with your lifestyle, Madgett says.<\/p>\n\n\n\n

\u201cIf you\u2019re not taking a close look at your savings, you could wake up in 20 years with savings based on the income you had 20 years ago,\u201d he says.<\/p>\n\n\n\n

You don\u2019t need to bank the full amount, he says. If you get a 10% raise, for example, bump up your savings by 5% and give yourself permission to spend the rest.<\/p>\n\n\n\n

Ignore the Joneses<\/strong><\/p>\n\n\n\n

Don\u2019t get lured into someone else\u2019s lifestyle, whether it\u2019s a colleague, a close friend or an Instagram influencer. Instead, keep your eyes on your prize \u2014 the financial goals you\u2019ve set for yourself.<\/p>\n\n\n\n

\u201cIt\u2019s way too easy to fall into the trap of keeping up with those around us because we want to look as successful as they do,\u201d says Steve Adcock, founder of ThinkSaveRetire.com. \u201cThe Joneses are probably broke because they are trying to keep up with their neighbors.\u201d<\/p>\n\n\n\n

This article was written by NerdWallet and was originally published by The Associated Press. <\/em><\/p>\n\n\n\n

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