We all believe that we should be earning more than what we currently make. But have you thought about what you would do when you finally get the salary increase?
Instead of fumbling the bag, we will have you prepared for your salary increase with these three handy tips.
Take deductions into consideration
Having a salary increase can mean you have more breathing room financially, but before you bank on the promise of the money to come, keep the deductions in mind. Before-tax, a salary increase can appear to be sizeable but depending on what tax bracket you have moved into you will find that your take-home salary decreases.
According to StatsSA, the average South African worker earned R21,432 per month. However, the take-home salary was at a decline of 0.2% putting the average pay at R14,385. Depending on which tax bracket you fall into you will have to take into consideration the percentage of taxable income which ranges from 18% - 45%.
Adjust your budget
There are plenty of plans that you probably have in place for your salary increase, but before you do this, re-assess your budget. Check places in your budget for things that you can cut back on or areas that are underfunded to set a realistic budget. If you do not have a budget in place, set one before you start executing your plans.
Remember to keep the tax deductions in mind before you set a new budget. List your fixed monthly expenses, the debt you need to take care of, and wealth investments that you would like to make. Investing in things such as life cover and investment accounts to grow your money is something worthwhile when it comes to creating a financial safety net.
Space out major purchases
Spacing out major payments such as making a deposit towards your bond, purchasing a new car, fridge, or smart home technology can give you enough breathing room and help you avoid putting a strain on your budget. It is also a savvy way to avoid purchasing something that you do not need or will regret later.
Once this is out of the way you can enjoy your salary increase by treating yourself. Just remember to keep track of your spending to avoid going over your budget.