VOL. 130 | NO. 90 | Friday, May 8, 2015
What to Do After a Big Raise
ANGELA COPELAND | Special to The Daily News
As today’s professionals are learning, the fastest way to get a big raise is to switch jobs. Often, staying at the same job will put an additional 2 to 3 percent in your pocket each year. That’s not enough to keep up with the rising costs of rent, food or much of anything.
Picture this. You’ve been working for years to get a promotion. Finally, you land it! You get much more money, an impressive title, a better office and maybe even more vacation. It’s an incredibly exciting time in your life. What should you do now?
This is a tough question that comes up every day and deserves a closer look. Because of the difficulty involved in earning more money, we often feel entitled to do something with it – something fun, something big.
A few very common choices are: buy a new car, move to a bigger house in a nicer neighborhood, schedule a lavish vacation or purchase gifts for your loved ones. After all, you’ve earned it. It’s your money. You deserve it, right?
Of course you deserve to benefit from the fruits of your labor. It’s your hard work that’s gotten you here. But, something else you deserve is security and mental freedom. One of the first mistakes people make is to overextend themselves financially.
If you’re committed to spending all of your paycheck every month and you lose your job, how hard will it be to replace that job? The more you make, the less jobs there are on the market in your price range. Almost just as bad, what if you dislike your new job, but you’ve already committed to a new lifestyle that you can only afford if you stay there? Now, you’re chained to the company in a sense. That’s not good for anyone’s state of mind.
One of the first things you should consider is to maintain your current standard of living for at least six months. Give yourself a chance to test drive this new job. Take the extra money you’ll be making and build up your emergency fund. This is the money you can use to live if your income was to be compromised.
Once you have six months or more of an emergency fund built up, begin to grow your retirement savings and investments. If you aren’t sure where to start, try reaching out to a fee-only financial planner in your area for advice. You can find one at www.napfa.org. The National Association of Personal Financial Advisors helps their clients with their finances without muddling the waters by taking a commission on their investments. They take a fiduciary oath and subscribe to a code of ethics.
Overcommitting yourself can be both risky and emotionally taxing. When you receive your next big raise, celebrate in a meaningful but thoughtful way. Your emotional well-being and having the option to walk away from a job that doesn’t work for you is worth much more than any big house or new car.
Angela Copeland is CEO and founder of Copeland Coaching and can be reached at CopelandCoaching.com.