Did you get a raise? Congratulations!
I'd like to call your attention to a trick you can use to boost your savings if you are fortunate enough to get a bonus or a raise.
Save Money Games has several posts about different games (tricks, really) that you can use to save up money. Living a Raise Behind is an easy way to save up, pay down debt, etc. The idea is that, after you get a raise, you budget as if you didn't get that raise. In going from $1,500 to $1,600 per paycheck you budget for $1,500. Going from $1,600 to $1,750, you budget for $1,600, and so forth. The reasoning: You were getting along just fine without the raise (probably) so just use the opportunity to boost your savings! The extra can go toward any number of savings vehicles:
- Bump up your 401(k) contribution or IRA if you're still under the annual contribution limit
- Pay down your mortgage with the extra amount
- Pay down your credit card debt, if you have it
- Put it into a child's college account
- Certificates of deposit, brokerage accounts, gold coins, life insurance, or any other vehicle you see as a good investment! (Make your own decisions here — these are just examples!)
I might also splurge before the savings begin, so that you enjoy the fruits of your hard work now rather than 10, 20, or 30 years down the road.
