I got a promotion last week. My hard work and business knowledge has finally paid off. I’m going a significant pay increase, so now I have to decide how I’m going to allocate it.
Pay Increase
This promotion is going to net me around an extra $1000 per month, so it’s a significant increase for me. If you’ve read any of my other posts, then you know that I’m debt free besides a mortgage. I can realistically only save it, spend it, or pay off the house with it. Here are my thoughts.
Brainstorming
My initial thinking is that I’m going to bump up my investments by $500 a month and keep the remaining $500 as cash savings. I’m not really wanting to pay extra on the mortgage at this time. If I decide to do so, then it won’t be monthly. I may opt to make an extra payment per year, but I think I can do better with my money by investing it.
The reason for building cash is just to have a lot of it at hand for future needs. Eventually I’ll need a new vehicle, a roof on the house, upgraded HVAC, and countless other things. I’m in a perfect spot to build cash, so I want to take advantage of it. Being debt free is great, but I’ll need access to some liquid assets if I hope to stay out of debt.
Things to Avoid
One thing that I am not looking to do is to increase my lifestyle to match my new income. I’ve made that mistake in the past, and I’ll never do it again. Here is a good place to learn how to manage a sudden increase in wealth. While new cars and other material possessions are tempting, I need to stay the course with my investing strategy.
Conclusion
I got a promotion last week. I feel blessed to be in this spot, and I want to manage my new income responsibly. Have you ever had a sudden increase in pay or received a windfall? How did you manage it? Share in the comments below.
Read Also:
Multiple Income Streams: Do Not Rely On Your Day Job
How to Start Monetizing Your Passion
How Long Would it Take to Save $1000?
Based in the Pittsburgh, PA area, Brian holds full-time employment as a Warehouse Manager for an electronics firm. Brian enjoys wealth building, investing, gardening and the great outdoors. Brian holds a B.A. in Environmental Studies from the University of Pittsburgh and an MBA from Robert Morris University.
