Save articles for later
Add articles to your saved list and come back to them any time.
It’s easy to dream of a plump bank account, exotic holidays and genuine ease when we score a pay rise, but if we start living the good life too quickly, the cash injection can evaporate quicker than we can search “luxury accommodation”.
With wage growth sitting at 3.3 per cent this year, many of us can expect a little pay packet injection soon, but with the simultaneous cost of living pressures, it’s never been more important to use our pay rise wisely.
Some people will get a pay rise this year. Here’s how to make the most of it.Credit: iStock
That’s something Téa Angelos, 26, learnt firsthand after wasting countless dollars from extra retail shifts on clothes.
“It came to the point where I was getting things in the mail that I didn’t even remember that I’d ordered,” she recalls.
“I had very little to show for it, and that’s when I stepped back and started to re-evaluate and began the journey of learning about finances and working towards goals. I felt a bit dumb and ashamed … I’d been spending money to fill a void if I’d had a bad day.”
With rising interest rates, rents and petrol prices, Jen Richardson, founder of Got Money Honey, says there’s never been a more critical time to crunch our expenses to maximise the impact of our pay rises.
“With costs going up, you need to redo your budget because you don’t want your whole pay rise to be used on those essential things,” she says.
“There is always savings to be made if you dig deep and have a look at where you are spending your money.”
Richardson believes that clever grocery shopping remains one of the best ways to shave money off essential costs.
“Only buy your non-perishables when they’re on sale and plan your meals around what’s on sale,” she suggests.
“You’re combatting those increasing costs by looking at savings in other places … and it means your pay rise can be saved for nice things or to invest or get yourself ahead. Everyone in our office is doing it and we’re all finding $60 a week in savings.”
Angelos educated herself about budgeting and personal finance and now shares her knowledge through her education platform Smart Women Society. She says anyone pitching for a pay rise should be aware of the difference between “lifestyle elevation” and “lifestyle creep”.
“One of the biggest money mindset mistakes you can make is lifestyle creep,” she says.
“When you receive a pay rise, it can be tempting to spend that extra money on a nicer car, more expensive restaurants or fancier clothes. Before you know it, these former luxuries become necessities and you find yourself running out of money each month.”
Making steps to save can start small but they all add up.Credit: iStock
Lifestyle elevation, on the other hand, is about aligning your money with your values to genuinely enhance your life, while being mindful of your future. It might involve investing in self-care or paying for a cleaner to free up time to spend with your kids.
“Lifestyle elevation will align with your personal financial goals and values, whereas lifestyle creep will hold you back from achieving them,” she explains.
If you’re getting a pay rise, Angelos says your first step should be calculating the after-tax amount you will actually receive.
“Whenever you get a pay rise, re-visit your budget, writing down how much is actually coming in and where that money is typically going, such as on groceries or eating out,” she says.
“Then grab a sheet of paper and split it in half. On one side, write the things that you value spending money on – it might be travel or nice wine or quality cuts of meat. On the other side, write your financial goals, whether it’s saving for a home, a holiday or investing in super or shares for your long-term future. Once you’re satisfied that you’ve covered off your short and long-term goals, see what money you have leftover to spread across the things you value.”
If you’re hoping for a pay rise this year, Angelos suggests starting an “accomplishments tracker” document so you’ve got evidence of your worth.
“Record positive feedback or numbers or statistics that show you’ve improved or increased customer value,” Angelos suggests.
“Then when you come to having to justify your pay rise, you won’t have forgotten anything.”
Make the most of your health, relationships, fitness and nutrition with our Live Well newsletter. Get it in your inbox every Monday.
Most Viewed in Lifestyle
From our partners
Source: Read Full Article
