What Will You Do If You Receive Salary Increase?

Again, what will you do if you receive a salary adjustment from your employer?  How will you handle it?  I’ll explain later the best decision about it.

Employers obligingly (morally and legally) have to give annual salary increase to all of their salaried employees.  This is very essential to beat inflation.  Inflation silently eats the value of our money.  Specially to our salaries.

Speaking of inflation, how much salary increase should employees received?  Obviously it should be higher to annual inflation rate.  This 2015, the average inflation rate is *4%.  Employers doing adjustment also include inflation rate.  The higher inflation rate, the higher increase should they give to their employees.

How most employees use their salary increases?  How do they handle it? Well 90% of employees I known, these will be their adjustments to their new  life style:

  1.   Acquire new post-paid bills – this either a new post paid plan of a new cellphone, a car loan, a housing loan, or for new gadgets (using deferred payment using credit cards).
  2. Acquire new other expenses – these include miscellaneous expenses such new memberships in popular gyms, or opting a new hobby that costs will offset to their salary increase.

How about those remaining 10 percent?  Well there are still employees are smart enough to take advantage of their salary increase.  These are their smart moves:

  • They invest at least 60% of their salary increase to UITF, Mutual funds, and stock market.
  • They get life insurance that will protect them from uncertainties at the same time earning high return savings in the long future.
  • On top of these, they maintain their current life style and control their expenses until they reached their desired earning fund.

Receiving a salary increase will give us great advantage to achieved desired lifestyle in the long future where we are older, by investing it and keeping the  current lifestyle.  These will prevent ourselves from additional expenses that will also increase cost of living.

“In every increase in salary, allocate at least 60% of this to investment and the remaining 40% is for your little wants.  The higher allocation for the investment the better. “

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Eleison Cruz

Financial Consultant. Personal Finance and Investment advocate. Author of The Good Asset, a blog that educates people in investments, financial literacy, and life insurance. Visit www.thegoodasset.ph

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