Earned an Income Bump? Increase Your Savings Rate (Not Your Spending)!
Whenever anyone gets that much awaited raise or bonus, we start thinking of all the things we want to spend it on. After all, we should be rewarded for our hard work. But a smarter way to think about your bonus is as a way to invest in your future, so instead of spending it all in one go, think of all the things you could enjoy doing during retirement with that money.
If without that raise you wouldn’t have been in a tight financial spot anyway, then there’s no need to tap into it right now.
But, of course, in some situations we may need to use that extra money- and that’s understandable. In fact, we expect this to be the case for most of our readers. In that case, you should still aim to save a percentage of that raise.