Intelligence is Value

After working your butt off, you finally got a well-deserved raise. Popping an expensive bottle of wine may seem the right thing to do after hearing the good news, but slow down your celebration thoughts first and think of how your extra money will be beneficial for you in the long run. We don’t mean that you shouldn’t splurge a little, but take time to think about your financial and personal goals. Whether you got a small or big raise, we’re here to suggest six smart things that you can do with your extra cash.

1. Add it to Your Retirement Fund

You probably know that contributing to your retirement fund is a good idea, especially since most employers in Singapore tend to match contributions to a certain percentage. But what you might forget is that every time you get a raise, you should also increase the amount of your contributions since when your salary increases so does the amount of contribution your employer will match. If you contribute S$100 dollars every month, you’ll get S$1,200 in a year. In 40 years, you have already saved S$48,000 dollars (these doesn’t include the contributions of your employer).

2. Pay Your Student Loans

For you to invest your money in the future, you first need to pay off your previous debts. Pay more than the minimum requirement on your student loans to avoid paying more interest than you need to. Although it won’t make your life easier, signing up for auto-salary deductions will also help you save some money. Most lenders also offer an interest reduction if you sign up on their automatic monthly payments.

3. Deal With Your Credit Card Debt

If you’re already paying the monthly minimum of your credit card, then that’s a great start. If you want to speed up the elimination of your debt, however, then consider sending your monthly increase to your credit card company. If you’re already living comfortably before receiving the raise, simply pretend you didn’t get one at all. You’ll feel so much better once you’re debt-free – then you can start enjoying your raise guilt-free.

4. Set an Emergency Fund

You’ll never know when bad luck may strike. Car trouble, health issues, or your partner losing a job are some life events stressful enough without having to worry about money as well. Prevent this happening by creating an emergency fund with your raise, and when the time comes you’ll need to use it, you can easily take a deep breath knowing that you’re safe for now. Financial experts advise saving enough to cover four to six months’ worth of expenses. Even if you’ll never use this fund, having it around will surely give you much peace of mind.

5. Prepare for Life-Changing Events

First comes marriage, followed by a baby, and then lots of extra expenses. If a house, a wedding, or a child is on your horizon, then consider sending your extra money to a special savings account. Keeping your extra funds in a separate account will prevent you from accidentally using it. You can also use finance programs like Mint to assist you in setting goals based on certain dates and help you decide on the amount of contribution you’ll give each month.

6. Invest in Yourself

There are a lot of ways of investing that doesn’t involve gold, oil or property. Investing in your future and well-being are some of the smarter ways to use your money. Use your raise to further your education, develop your career, or benefit your health to reap its rewards now and in the future. Taking an online course about a new skill, or signing up for a weekly yoga session are some of the ways on how you can use your extra money to nurture your well-being.

Getting a raise definitely calls for a celebration, but before you go out and start partying, think about how you’ll be able to smartly use your extra cash. Learning how to spend your money on the right things will surely help in preparing you for the future – and watching your piggy bank fill up can also be one gratifying experience!