Pre-Plan Salary Increases to Prevent Lifestlye Inflation

Most of us, if we are lucky, get some sort of raise every year. It may be fixed or it may be decided by someone above us in the company. It is very tempting to simply add your raise to your "fun money" and move on with the status quo. Don't do it! Plan ahead and make sure you get ahead!

I got a salary increase last month. In fact it was a reinstatement of my old salary when my company had to cut pay to make it thru an economically challenging time. Once I got work that I was getting full pay back I went to work on my budget to be sure I utilized the extra money effectively. Once I figured out what the take home increase was I update my excel budget. Here is what I did with the "new" money:

• Increased my 401(k) contribution
• Restarted my emergency fund deposits (monthly)

By planning ahead and foregoing the opportunity to spend the money unwisely I am now well on my way to meeting my big goals. Most of us get some sort of warning before a raise kicks in. You must act immediately to be sure you stay on track. This is a good problem to have!