Financial Mistakes People Make After Getting A Raise

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avoiding financial mistakes

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Who doesn’t love getting a raise? They aren’t as common as they used to be. Did you know that there was once a time when getting a three percent raise, every year, was just standard? You didn’t even have to ask for one! Companies understood that, as the cost of living increased, so, too, should their employees’ wages. Now that sounds like a dream, which is a sad statement on our perception of fair treatment. Today, you need to ask for a raise and sometimes fight for a raise. If you get it, you often know that means you are valuable to the company. They could have hired somebody else for less, but they like what you specifically contribute. That feels pretty good to know. But don’t let it give you a big head – the kind of big head that goes off and buys a designer bag with matching shoes to celebrate this raise. That almost immediately defeats the purpose of the raise. However, people make those types of choices all of the time. Make money, then blow the money. A raise doesn’t do you much good if you don’t handle it responsibly. Even though it’s exciting and validating, a raise doesn’t mean you’re set for life. You still need to be responsible. Here are financial mistakes not to make after getting a raise.

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Upgrading your apartment

The second you make more, you may think, well, I just got a five percent raise so I can move to an apartment that costs five percent more. You’re just itching to bust out of your rent-controlled place and into a luxury unit. Stop right there. You should be saving your new, higher-income for a down payment on a house rather than throwing it away on higher rent.

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