Researchers have shown that the happiness of a pay raise is short-lived, but I don’t think there’s really much to complain about or much harm in having one. Whether you earn one through moving jobs, at your own job, or increasing your freelance rates, to someone getting even a $2,000 raise per year, it could add up to hundreds of thousands of dollars over their lifetime, if planned correctly. But unfortunately, even with a significant pay increase, many end up where they started.
If you have no goal to attach to your money, it’ll just end up getting swallowed up by life. And there’s no happiness in a pay raise, that you have nothing to show for. All it takes is a little planning.
If I had a $1,000…
What would you buy if you had an extra $1,000, $5,000, $10,000 or more in salary? Would you put some money aside to plan for a trip? Put some aside into extra mortgage or debt payments? Investments and retirement savings? A car? Child’s education? Take up a new art class you’ve always wanted to join? Hire a housecleaning or lawn maintenance service? I can go on and on, but the fact remains, it’s all in your control.
Who doesn’t daydream every once in a while about what you would do if you had a bit of extra money? Anytime I’ve received a raise, I usually wait until after my first pay until I start allotting my extra pay. This allows me to pad the account with some extra fun money for the first while, and also it lets me know, exactly what my net income increase will be. While there are calculators that can give you an estimate as to how much tax will be deducted from your paycheque, I haven’t found them to be quite accurate. I don’t want to start funding an investment account, for example, only to find I’m investing more money than I have to invest. Do it once, do it right.
Some may have noticed I’ve been a little quiet around the blogosphere. Weeks ago, I got a call from a former employer, offering me my old job back. Truth is, I hadn’t really left. I was still working for them at nights, when I could, on top of my day job, additional night time courses taken, and of course the blog. Which led to many late late nights, after the kids were put to bed. And at times, I felt like I was burning the candle at both ends. Well, it’s a good thing I never burned my bridges. Suffice to say, I took the job. Which means I’m no longer having to work those crazy nights and now have more time to myself (and I’m taking it) and more time to spend with family. Which was also one of my top priorities this year. Check! And I won’t lie, the extra money is kind of nice too.
There’s a cost to changing jobs
Before you start any position, obviously you would have had to factor in any extra costs applicable to your new job, and hopefully negotiated your terms before accepting the offer. But there are always those things you either forget to account for or sometimes the move may make sense even with the extra costs.
Aside from any major costs like relocating for work, there are every day things that you also need to account for, such as:
- Clothing. In my case, showing up in clothes I was wearing 6 years ago, probably not a good idea.
- Transportation costs. Is it further away? In which case, you’ll be spending more on gas, car insurance, car maintenance, etc. Or are you taking any toll roads?
- Do you need to purchase any extra equipment? (GPS, new phone, upgraded phone plan, etc) as part your job function or because of a longer drive?
Of course, one can argue that staying in a job that pays little to no increase will cost you more in the long run, than moving jobs for extra money, even with all the extra expenses accounted for. Nonetheless, these expenses should still be accounted for and I’m sure you can think of many other examples.
Now for the tally, Sally
Once you have your confirmed paycheque amount, subtract your latest paycheque from an average paycheque from your last couple months either from your current job or at your last job. Subtract the expenses and jot that number down.
Now’s where the fun begins. Take this number and plan how you would like to divvy up the extra dough. Talk it over with your loved one and set some quick goals for the year. It can take you all of 10 minutes or as long as you’d like and automate what you can, and leave the worry behind. But whatever you do, take a couple of minutes and make a plan. Don’t let your pay increase slip through your fingers.