Every time you get a salary increase, whether through change of jobs, a promotion or through a performance appraisal, you have the opportunity to do something powerful with it. Instead of inflating your lifestyle to match your new income, here are a few ideas to move you closer to reaching financial independence:
Use your increase to aggressively pay off debt
Debt is like having a rope tied around your ankle pulling a 20kg weight, no matter how quickly you try to walk, it will slow you down. You will not build any real wealth. My tips when it comes to debt are:
Hold yourself accountable, realise the mess you have created
Forgive yourself…learn from your mistakes
Commit to getting out of debt…know that it will hurt but you can do it!
Find a method of paying off the debt that works for you…I suggested two methods in this article http://womanandfinance.co.za/methods-of-paying-it-off-debt/
Use the increase to start saving for an emergency fund
You need an emergency fund because
No one has never NOT had an emergency! Emergencies happen and it can be one big inconvenience and sometimes a very expensive inconvenience.
you do not want to get into debt because you did not budget for those inconveniences
you do not want to draw money from savings earmarked for other important things
Try put away either a specific percentage of your salary towards building an emergency fund or a Rand amount, say 10% of your salary or R500 per month according to your affordability, but commit to it, no matter how small the amount is.
Save to invest
Investing in shares/equity is not only for the rich and wealthy. Sure, if you want to purchase blue chip shares like your Aspen, Sasol, MTN or Pick ‘n Pay you need a little bit more than a couple of Rands, however you can tackle this by either saving money with the intention to invest once you have decided which companies to invest in or alternatively, you can buy cheaper shares in companies which are still growing and have the potential to yield high return over a long period of time. The tricky part with buying shares really is lack of education, not so much expertise, you need to do your research about different companies and the risks involved in each industry.
Put it towards your retirement funding
Channel your new found fortune to benefit your latter years, it might seem like a long way to go but trust me I’ve seen people who thought they were too young to think about retirement then boom, they are in their 40’s and they have to invest a whole lot more on a monthly basis than they would have had they started in their 20’s. I always say, the best way to think of retirement is this: imagine a 30 year old who wants to retire at the age of 60 and say their lifespan is up to 90 years…effectively, whatever you save and invest in the 30 years prior to retirement will fund the next 30years after you retire…that’s a whole lot of time if you ask me, make sure it’s well funded…. You don’t want to be all hair, make up and errthing on fleek now and in your retirement you’re poor…not a good look, not a good look at all!!!!!!
Start your Christmas gift fund/ Fun fund
We’ve all been there, we tell ourselves that we will not overspend during the festive season, only to do so and be left with a Janworry hangover of regret. Save yourself the guilt and regret this year. Start saving for your holiday spending early on…use the #52weeksavingschallenge to help you, afterall, #GirlsJustWannaHaveFunds. Go to http://womanandfinance.co.za/52-week-savings-challenge/
No matter your income, you always, always have the opportunity to do something powerful for yourself with your money. Just make the decision and work towards it every single time money hits your bank account.
If you would like to contact me for a consultation, please email me on info@womanandfinance.co.za
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