Household Income Rises Requiring Contrarian Spending Restraint
With the extra cash it is best to ensure the new income can be put to work positively, instead of simply spending more. One of the best things to do now is use that income strategically.
GreenPath Financial Wellness, a nationwide, non-profit credit counseling and education organization, has put together five simple tips, in the form of the acronym PRIDE:
1.Preserve – Putting more money away is always a good idea. Whether it’s towards retirement, paying for college or building an emergency fund (see #2), preserving that bottom line, a bit more, can really add up. Make these deposits automatically from your paycheck, so that you are paying yourself first with the new income.
2. Reserve – Depositing $20 a week in an emergency reserves fund, will mean over $1,000 cash in a year, for that new set of tires or to replace that broken hot water heater. Keeping these expenses off your credit card will give you peace of mind (and help you steer clear of interest expense, if you don’t pay off the balance in full, each month.)
3. Invest – Now may be the time to up your workplace contributions towards retirement. Examine limits and company matches to make sure you’re maximizing your investment. If you receive an annual salary increase, adjust your withholdings to put that extra money into savings or retirement, instead of spending it.
4. Donate – Charities always need our help, especially as the holiday season approaches. If you have a cause near and dear to your heart, consider sending them a small donation. It will not only help the charity, but gives you an emotional benefit, too, in knowing that you are helping out someone in need.
5. Evaluate – What’s your priority? If you’ve been putting off necessary home or auto repairs, look at your budget, to see if you can afford the repair. Do you have credit card balances? Paying down credit card debt can help your overall bottom line.