So, you got a raise?
Getting a salary increase is often a reason to celebrate. Finally, all your hard work is recognized by your employer and the value of your contributions now manifests itself through monetary rewards.
Apart from the usual merrymaking over food and drinks with friends and family, you might feel that you deserve to treat yourself for a job well done. Shopping for big ticket items is okay to a certain degree, but if you want to magnify your success in the long run, here’s how to save money from your salary.
Do not succumb to lifestyle inflation. This refers to the increase in spending when an individual’s income goes up, as if former luxuries have grown to become necessities. Self-awareness helps in avoiding lifestyle creep from taking place. Be sure to consider how integral your purchases are to your life before falling into the trap of the “perfect lifestyle.”
Calculate your adjusted take-home pay. While you’re getting paid more, it doesn’t mean you’re getting all the extra cash. There are still necessary deductions, such as taxes, insurance, and gym memberships, so calculating your new monthly net income will help you realize how budgeting and saving can only remain relevant even with a salary raise. Setting up automated saving platforms is one way to protect your hard-earned money if you’ve been thinking about how to manage salary without the hassle.
Prepare for the future by building an emergency fund. Nothing hurts more than the need to break into your savings for a huge sum that won’t serve you any direct purpose but pay unwanted bills. Expenses like unexpected hospital bills, intensive car repairs, and lack of employment opportunities in the family are some reasons that can potentially empty your bank account. Setting up a savings account with Metrobank for your emergency fund enables you to access your funds through our Metrobank Mobile app, so you can monitor and check your hard-earned money anytime. A working amount for an emergency fund should have the capacity to pay for three to six months of your living expenses.
Clear any outstanding loans. The sooner you rid yourself of any monthly payment obligations, like credit card debt and other high-interest loans you’re still paying back, the earlier you can embark on your path towards a debt-free life. Use the extra income from your salary increase to accelerate payment and decelerate the growth of interest payables.
Use the money for your retirement. Make higher monthly payments to your retirement fund from your extra income. Like building an emergency fund, putting your new salary increase to good use can have more beneficial returns later in life. Improve your future financial well-being by securing your retirement while at the peak of your working career.
Key takeaways on saving
Receiving a significant bump in your paycheck may seem like a license to be more extravagant in your spending habits. After all, it’s not a bad thing to buy yourself something nice. In fact, it’s also just as important as saving and budgeting, because what’s the use of having money if you can’t enjoy it? It’s the frequency of these spending habits that one should watch.
Once you’ve determined your new monthly net income, including all other revenue streams, you can carefully portion and reallocate your finances accordingly. Choosing to keep the same spending habits before the salary increase can help you achieve healthier and better long-term financial goals in the future.
Don’t hesitate to contact Metrobank today to help you get started on saving!