Pay Raise: 5 Financial Mistakes You’re Probably Making… And Don’t Even Know It I can still remember vividly how imprudent I was when I got my first promotion at work. You know that kind of feeling you get when you just received a huge chunk of money. It was the first time I owned that kind of money, so I felt on top of the world. The first thing that came to my mind was shopping. It suddenly occurred to me that I had so many things I needed to purchase and this was the moment I had been waiting for, so I hit the stores. I even got some items on credit which required a hefty monthly payment. I didn’t have a problem with it because, I felt my monthly pay check was just enough to take care of that. However, as the months went by, I realized that …show more content…
This can happen to anybody. Many of us go off the rails with our finances the moment we get our first big raise. It is actually very easy to make very bad mistakes when you feel you have a lot of money at your disposal. In this post, we will show you 5 financial mistakes people often make when they get a pay raise and how you can avoid them: Compulsive Spending You have been dying to get that new iPhone Apple just rolled out, and as soon as you got that raise you rushed to the nearest Apple store and purchased it. That is called compulsive spending! This is usually linked to excessive availability of huge finances. Usually when people have a lot of money at their disposal, they tend to spend blindly. Don’t go running to stores purchasing things just because you want it and not because you need it. Know the difference between “needs” and “wants”. There is a big difference between what you want and what you need. Needs are the basic things that you require to live your daily life. While Wants are things that are not really necessary but you desire or wish to have them. Learn how to manage your expenses and put a limit on your spending. Going for …show more content…
Not Reviewing your Personal Budget Your budget plan before the promotion/raise should not be the same as now. The moment your monthly income increases, you should review your personal budget as well. This enables you stay right on target and also manage your finances properly. No Savings The fact that you have an extra income now doesn’t mean you should throw your savings habit out the window. You might feel that you do not need to put money aside since you have enough to take of any emergency that might occur. Strike out that thought! In the case you lose that job, what would you fall back on? You never know what the future brings. Even if you don’t lose your job, you may need to take a big step higher in your life or your career, like starting your own business. That extra cash stacked away will definitely be of great use. Continue to save and if you never used to saving before, you start doing that now! It is very