You've all seen it happen. Minimum wages are being raised and it won't be long before almost everyone gets some sort of raise. And many may now be tempted to change their spending habits because they'll be earning a little more. There's no need to spend more money just because you are earning more. Save the raise. That money could get you financial security if you invest it wisely. By the way did you know that investing just $1 a day can yield $698,450 in 50 years? Take a look: Log In Half of that in 25 years? So why spend the raise when you can invest it?
We're conditioned to believe we're failures if we don't earn and buy more more more. Success is looking successful.. better cars, bigger homes, more toys etc, it doesn't really matter what you do, so long as you can afford to look the part. So when we earn more, it's automatic "now I can afford to.....". Personally, I could win all the money in the world tomorrow and I wouldn't change a thing. I would just feel more at ease about the future. Realistically.. when it comes to minimum wage going up, most won't be running out to buy a bunch of shiny things. They'll just have an easier time with bills. If that. Depending where they are and cost of living, which is pretty dumb across the board now.
Well the person would have to be meticulous with his/her finances and calculate the amount added to his/her previous salary rate. He/she should then take note of or keep to mind this amount and make sure to save it without fail on a regular self-imposed schedule. It can get kind of confusing if the person isn't too keen on details so let's just say, if you used to save $50 a week, after your raise, you should just endeavor to save more than that. Maybe increase your target weekly savings to $60 or $70 a week. Just my two cents, though. Rather than change your method, you should just enhance or improve it.
My spending habits hasn't changed much since I started to earn more. saving 1$ per day is easy and consistent enough to do for decades, enough to save lots of money for retirement or as backup for emergency. When you earn more money than usual, you should strive towards saving more money. Just "Slightly" more though, don't be so stingy with yourself and allow you to spend more money in things you can now afford and truly enjoy.
Whenever I would have a salary increase, I would treat my family to a good restaurant. But that's it, no extra spending. The increase in my salary goes directly to my bank account for lifetime savings. It stays there and I avoid the temptation of acquiring new expenses like an extra housemaid or installments for a new appliance. After experiencing the hand-to-mouth existence for so many years when we were saving for a home of our own, it is now the time to relax and have peace of mind knowing that I have extra savings that I can use but is not using.
Unfortunately some us believe, quite incorrectly though, that the more they earn, the more financially free they are. They therefore seek a better lifestyle. Financial freedom comes from being wealthy and a better pay isn't wealth. Its only a means to building wealth which comes from savings and investments. A job can be lost, so what next? If one can save and invest every pay rise to a point where they can live off the returns without worrying whether they work or not, then that's financial freedom. I would say changing spending habits because of a pay rise is not having a financial plan for the future at all. If I'm getting along with my present pay, then I'd rather put every pay rise towards my future financial plan. After all, my salary will not be able to meet all my future financial needs, neither will it last forever. The truth is, I'm not going to work forever. Remember, people don't plan to fail, they fail to plan.
My dad is like this. He makes a ton of money and refuses to splurge on anything. He also thinks business class and first class on flights is the biggest scam ever. I think his frugal spending habits are the reason he has maintained his wealth so well over the last 30 years.
