Doghouse Banking

How to Keep Your Spending in Check After a Big Raise

Learn how to manage your spending after a salary bump without sacrificing your happiness.

Congratulations! You’ve leveled up in your professional life, and your salary has doubled from $40,000 to $80,000. That’s like going from being a side character in a sitcom to starring in your own blockbuster movie. But just like in any good story, with great power comes great responsibility—and that includes how you handle your newfound income. It’s all too easy to let lifestyle creep sneak in, like a plot twist you didn’t see coming. Before you know it, your spending starts to match your income, and suddenly you’re left wondering where all that extra cash disappeared to.

The first step in avoiding lifestyle creep is to take a moment to appreciate your financial situation, but without going overboard. Instead of thinking, "I can finally afford that luxury car," try reframing it to, "What can I do to ensure this raise sets me up for long-term success?" Consider making a budget that reflects your new salary while still prioritizing your financial goals. This can feel like creating a game plan before heading into battle, ensuring you know where each dollar is going.

Next, consider the 50/30/20 rule as your trusty sidekick. This means allocating 50% of your income to needs, 30% to wants, and 20% to savings and debt repayment. With your new salary, it’s tempting to bump those want percentages up, but resist that urge. Instead, focus on what truly brings you joy and satisfaction. If you love dining out, maybe keep that budget for a couple of nice dinners each month instead of every weekend. You can still enjoy the thrill of your new lifestyle without blowing your entire budget.

A common pitfall after a big raise is the sudden urge to upgrade your living situation. Sure, it sounds nice to move into a fancier apartment, but before you do, think about whether it truly enhances your quality of life. Will that extra space bring you happiness, or will it just come with higher rent and utility bills? It’s a bit like upgrading to the latest smartphone; while it’s shiny and new, sometimes the old one does just fine for texting and scrolling through memes.

Another way to keep lifestyle creep at bay is to set specific financial goals. Instead of just saying you want to save, turn that into action by setting a target—like saving for a house down payment or building an emergency fund that covers six months of expenses. Visualizing those goals can keep you motivated and help you resist the temptation to spend on things that don’t truly matter in the long run.

Finally, consider the value of investing in experiences rather than things. Instead of splurging on the latest gadget, why not use some of that extra cash for a weekend getaway or a class that piques your interest? Experiences enrich your life and often have a longer-lasting impact on happiness than material possessions. They’re like the perfect plot twist in your life’s story that you can look back on and smile about.

In short, doubling your income is a fantastic opportunity, but it’s essential to keep your financial compass pointed in the right direction. By budgeting wisely, setting goals, and focusing on experiences over material upgrades, you can enjoy your new salary without succumbing to the sneaky trap of lifestyle creep. Just think of it as keeping your financial plot line engaging and full of twists, without letting the drama get out of hand.