Be smart with raises and windfalls
Congratulations on the raise. You’ve worked hard to get it, and now it’s time for it to work for you.
Clark has her own twist on what you should do with a raise. “When you get a raise, give half of it to your Now Self’ and half of it to your Future Self,’ the Certified Financial Planner says.
For instance, if you get a 4 percent raise, split the amount — put 2 percent into a checking account, and another 2 percent toward retirement savings.
Diverting 2 percent away from your “Now Self” will help prevent “lifestyle creep,” when you use new money to increase your lifestyle today instead of saving for tomorrow.
Incidentally, you should also use any work bonuses, tax returns and even rebates to build wealth.
“Put that into your IRA or investment accounts for the future — it all adds up,” Clark says. “Later, you will be so glad you did.”