Are you looking forward to an income increase? Is your annual raise coming up or has your boss told you you’re getting a promotion or maybe even a bonus? It’s tax time and a tax refund may be coming your way, or perhaps you occasionally receive a reimbursement from a work expense.
During each of these expected (or even unexpected) times of receiving extra cash, the key question you’ll want to ask is: “Do I have a plan for what to do with this new found money?”
Often our income increases annually – yet most of us don’t take the time to think about what to do with this “extra cash” that comes our way. Perhaps you don’t even think of it as extra – so you’ve gotten into the habit of spending it without giving thought to the best place to use it. What’s the result? It disappears into thin air!
Why not answer this key question as a fun exercise and discover how to decrease money stress in your life? Or use it as a potential savings opportunity for a short-term or a long-term goal you’ve really wanted to make happen?
Below are a few suggestions to help you make your plan:
- First and foremost, add this new income to your budget.
- Then, review your budget for credit card or other monthly debt that you’d like to pay off or consistently pay more on monthly. Start with the debt charging the highest interest rate.
- Lastly, ask yourself: “Is it more important to put this money into savings at this time or should I use a portion of this new income for some spending fun?” Some financial advisors recommend using 10% of the funds and putting the rest into savings after paying off debt.
Consider this new money management habit to create more financial well-being for you and your family. Check out the links below for more ideas!