If you’re one of the lucky ones this year, you’ll be in line for a raise. You’ve worked hard and shown your worth so it’s only right that you’re getting a raise. First of all, be thankful that you are even in a position to get a raise with so many people losing their jobs this past year. In fact, our company had let the entire staff know that there would be no raises this year due to the current economic climate. In ways, not getting a raise could be a blessing in disguise.

Don’t get me wrong, it’s always a great feeling to see a jump in pay on your paychecks. The problem is, the first thing we often think about is all the things you could now buy with the extra money. All too often, the thought of saving the money probably never even comes to mind at first. Let’s face it, with new found money often comes an increase in spending. Why do you think all the new money millionaires that win the lottery end up broke? They can’t curb their spending. It’s even more difficult the younger you are!

In ways, not getting a raise allows us to get even more comfortable with our spending habits and keeping our budget in tact. Of course, we would welcome a raise, but we would proceed with caution and would avoid buying new things. Getting a raise really shouldn’t mean a lifestyle change. If you really think about it, the average raise in the United States barely even keep up with the rate of in inflation. So now you can see how getting a raise could be a curse if you are not careful.

What To Do When You Are Getting A Raise?

So what should you do when you get a raise? Here are a few ideas:

  • Keep your spending budget the same and allocate the extra money into your high interest savings account. Everyone can become a millionaire if you save!
  • Make extra payments on your high interest debt. Making extra payments can do wonders to your debt.
  • Put the money towards starting a rIRA, if you are eligible, and/or increase your 401k contributions. Investing early yields great rewards in the end.
  • It’s also important to realize that you do need to have balance. If you’ve had your eye on something, go ahead and treat yourself, but avoid falling into further debt with the purchase so it’s best to stick with paying in cash.
  • Start your emergency fund, if you haven’t already, or reevaluate if you need to allocate more funds to it.
  • Start saving for your child’s education such as a 529 college savings plan. It doesn’t hurt to plan ahead.
  • Still renting? Start putting the extra money towards a down payment on a house. Now, more than ever, are lenders requiring even more money down when looking to buy a house.
  • Set aside a portion to have a getaway weekend with your spouse or friends.

These are great goals to have when it comes to getting a raise, but we all know that the urge is always there to spend when you see your bank account grow each month. No doubt getting raises are always welcomed, but it’s important to realize that it doesn’t mean an automatic spending increase. Avoid the ‘I deserve this‘ attitude and you’ll be better off financially for sure. At least you don’t have to make any sacrifices or cut things off your budget!

What are some other financially smart options to allocate your new found money?

Stupidly Yours,




StupidCents was founded by Matt in 2009. His thoughts are shaped by his family and career and seasoned by his endless motivation to succeed personally, professionally, and financially.