You’ve Earned a Raise – Congratulations! Now what are you going to do with it?
As the recession moves further into food & beverage companies’ rear view mirrors, many employers are unfreezing salaries. If you’re one of those hard-working professionals who has been fortunate enough to earn a raise, use Kinsa’s tips to increase your financial literacy and use that extra income wisely:
- Determine how much more money the raise actually means. Taxes will take a chunk of your additional earnings, so wait until you get your first adjusted paycheck to see how much your net income (take-home pay) has actually increased.
- Use a 50/50 rule of thumb. Conventional financial wisdom dictates that you should save or invest half of any raise you earn, and use the other half to pay down debt. If that’s not immediately possible for you, set a date for when you will start saving – and stick to that commitment.
- Pay down high-interest credit cards. Direct additional income towards knocking out your debt – which may be costing you hundreds or even thousands of dollars in interest payments every year. When you get rid of debt, you’re able to invest even more of your earnings.
- Boost your emergency fund. Use the extra income you save to build-up the emergency cash reserves you’ve set aside to handle unplanned expenses.
- Contribute more to pre-tax salary deferral programs. Once you have sufficient cash reserves, start thinking long-term. If your employer offers a 401(k) or other retirement plan, it makes a great long-term home for your new windfall. Since the money is deducted pre-tax, it won’t lower your paycheck as much as you’d expect. As an added bonus, the pre-tax savings these investment vehicles offer allow your money to grow more quickly.
- Enlist the help of a professional financial expert. A trained financial advisor can take a comprehensive look at your current financial status and help you develop a strategy for achieving your short- and long-term goals. For example, an expert can help you effectively weigh the advantages of paying-down debt early, against the benefits of using that money to invest in retirement.
- Adjust your investment strategy as your needs change. Periodically re-examine your plan, to track your progress and and accommodate changes in your financial picture. When your circumstances or goals shift, the planning and management habits you’ve developed will equip you to embrace new opportunities and proactively address concerns.
- Save for something fun. You’ve worked hard for your raise – you deserve a reward! Set aside a little money each month to painlessly finance a big vacation, or to treat yourself to something special you wouldn’t otherwise buy. Just make sure that the money you spend doesn’t derail your overall investment strategy.
Think you’re worth more as a food & beverage professional than you’re currently making? Explore new career opportunities through Kinsa Group. As leading national food & beverage executive recruiters, we can represent you confidentially and search for a better opportunity that pays you what you’re really worth. Contact a Kinsa recruiter today or search executive food & beverage jobs here.