7 Great Ways to Save A Raise

Are you expecting to get a raise this year?  If so, have you thought about how you are going to spend it yet? Don't let yourself simply consume your raise.  You need a plan for the best way to use it.

Too often people have no plan for what they are going to do with their annual raise.  They simply allow it to be direct deposited into their bank account and they increase their lifestyle to consume it.

Raises are a great way to build up your savings.

So this year, don't be passive about your raise.  Plan how you are going to use it to make a difference in you life.  Once you decide on how to use it, automate the process so you can't deviate from your plan.

Here are 7 great ways to save a raise:

1.     Increase Your 401(k) Contribution - If you are not taking advantage of employer's 401(k) matching benefit, increase your 401(k) contribution by the percent of your raise.  This is my favorite way to save a raise because it is so easy.  If you are getting a 3% raise this year, just increase your 401(k) contribution by 3%.

2.    Increase Your Debt Payments - Determine what the monthly net amount your raise equals and increase your debt payments by this amount.  I put this second because I really like for people to contribute enough to their 401(k) to take advantage of their employer's 401(k) match.

3.     Increase Your Emergency Fund - Another great way to use a raise is to have that amount automatically deposited into your emergency fund.

4.     Increase Your Retirement Account Contribution - If you are already contributing enough money to your 401(k) to take advantage of 100% of the employer match, have no debt and have a fully funded emergency fund, you might want to use your raise to contribute to another retirement account like an IRA or a Roth IRA.

5.     Increase Your Mortgage Payments - Paying off your mortgage early is another great way to use a raise.  Again, increase you monthly mortgage payment by the amount of your raise.

6.     Increase Your Savings For Your Children's College Education - You know that your children's college tuition bills are going to becoming down the road.  Use your raise to start funding you child's 529 plan or education savings account.

7.     Spend it on a great vacation.  What are you talking about Hawk?  Well, if you are already doing all of the above, hell go reward yourself with a great vacation.  You deserve it!!

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2. 4 Steps To Change Your Relationship With Money Forever
3. Why Do I Need An Emergency Fund?
4. What to do with a monetary windfall?
5. 7 Ways to Reform Healthcare That Empower Individuals

Tagged as: 401(k), Emergency, Emergency Fund, money saving ideas