Paycheck Chronicles

Smart Things To Do With Your Raise


When you get paid in the upcoming few days, chances are that your paycheck will be just a smidge larger than it was last year.  The 1% raise may not be a lot, but it can have an impact if you use it wisely.  What are the smartest ways to use your extra money?

Retirement Savings

Whether you prefer the Thrift Savings Plan (TSP) or an Individual Retirement Arrangement (IRA), retirement savings is always a smart choice.  TSP contributions can be set up via MyPay and come out of your pay before it even hits your bank account.  If you prefer to fund an IRA, you can set up automatic transfers for the 2nd and 16th of each month.

Pay Off Debt

Paying off debt is consistently identified as the number one way to improve your entire financial future.  Even an extra $20 a month will help knock down a credit card or loan balance, and the interest charged will go down, too.

Build Up Your Emergency Fund

Having an emergency fund goes hand-in-hand with paying off debt.  Without an emergency fund, any unexpected costs will end up increasing your debt again.  As with everything, the first step is the hardest.  Save a little every pay period, increasing that amount as you can, and you'll suddenly find that you've put together a significant amount.

Save For Planned Expenses

We all have upcoming expenses:  new tires, a Permanent Change of Station (PCS) move, orthodoxies for a child, or college tuition.  The more you plan, the more manageable those expenses will be.  Saving your raise for a specific purpose will make sure it doesn't get spent in the piddly day-to-day spending that happens so easily.  You'll be glad to have that allocated savings when you need it.

I always, always, always recommend that you set up automatic transfers as much as possible to prevent allocated money from being spent unintentionally.  Our family utilizes allotments, automatic funds transfers, and a solid schedule of transfers to fund all these priorities.  I am way to disorganized to keep track of it all in my head!

Whichever option you choose, put that money to the best possible use for your particular situation.  You'll be glad.

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