海角大神

A raise is something well worth being proud about. You鈥檝e worked hard and your employer is recognizing that in the clearest way they can 鈥� with their cash.

The challenge is that when you get a raise, there鈥檚 a strong temptation to raise your spending right alongside it.

贵颈谤蝉迟,听there鈥檚 the temptation to celebrate and reward yourself.聽You鈥檒l tell yourself that you earned a goodie thanks to your hard work and you鈥檒l pick out a nice splurge for yourself. However, that splurge takes away from other goals you might have聽and聽a big splurge often comes with costs 鈥� insurance, a data plan, and so on.

After that,聽there鈥檚 the temptation to live 鈥渁 lifestyle matching your income.鈥�聽You raise your expectations in terms of the places you eat, the vehicle you drive, and perhaps even the place you live.

The result? You find yourself right back in the same financial rut you were in before that raise, just with slightly shinier baubles around you.聽

There鈥檚 a much better approach to this situation, one that can turn a raise into a lifeline to a better life.

The plan is simple.聽Figure out how much your raise increases your monthly take-home pay, then set up an automatic transfer to take that much out of your checking account each month.

In other words, you just continue to live on what you made before the raise. Meanwhile, the money from your raise is moved out of sight and out of mind, to be used at a later time for a well-considered purpose.

Don鈥檛 touch that money for a few months, then use it to take a big swipe at one of your debts. Don鈥檛 touch that money for a year, then use it to make an extra mortgage payment. Don鈥檛 touch that money for five years, then use it to make a large chunk of a down payment on a house.

Doing this聽changes nothing about your life. You鈥檙e still living exactly the same way you were before the raise. The only difference is now that raise is quietly working for you, building up and waiting for a chance to bring about permanent positive change to your life.

If you鈥檝e just received a raise, walk away from the temptation of lifestyle inflation. Instead, look at a raise as an opportunity to genuinely improve your life over the long haul, because a raise can certainly do that if you give it that chance.

This post is part of a yearlong series called 鈥�365 Ways to Live Cheap (Revisited),鈥� in which I鈥檓 revisiting the entries from my book 鈥�365 Ways to Live Cheap,鈥� which is available聽at Amazon聽and at bookstores everywhere.