As you go up the corporate ladder, your salary also goes up. You then get a new flashy car and go to the fanciest bars and restaurants. You just seem to need more stuff, right? Well, you’re not the only one spending your well earned money.
As you earn more money, you also get more ‘stuff’ and then… even though you’re making more, you seem to have less and are probably more debt. In fact, you have more expenses that you did a few months ago. This is what I call lifestyle inflation!
You make more, but the lifestyle you demand devours all the extra money. So, before your next salary increase, here are ways to help you make that increase count
Limit your ‘hobby’ shopping habit
I often hear debates about what most Zambians do. I’d say shop. Have you seen Soweto market on a Saturday morning? Check out mall parking lots on Saturday’s, even during the week!
When money is tight, you probably stay home so you don’t spend money you don’t have. However, when you get a small bonus, your taps wide open. Unfortunately, this is when a slow financial bleed begins as expenses start to rack up.
If you’re a recreational or hobby shopper and shop because it makes you feels good or its fun, you may have a shopping addiction that’s eating away your money. It’s time to stop the habit.
You might also like: How to encourage your family to save
Bank your salary increases and bonuses.
Instead of buying more things with a bigger pay check, try to bank it towards your financial goals instead. The best way to ensure you bank your salary increases is to save your income as a percentage. For example, if you get a 20% pay increase, boost your savings or investing by 20% more.
So, instead of saving K500 per month, use a percentage of your income instead. This way…as your income increases, your savings will too.
It also helps you live within your means and this ultimately creates financial security. But that expensive gadget will never give you with financial security! So, get your priority right and understand your needs and not wants.
Is your priority to save for your child’s education, build a retirement portfolio or save for a rainy day?
When you don’t know your priorities or forget them; you end up spending on short term wants like entertainment and shopping. Getting your priorities right will help you build long term wealth.
Set your financial priorities and stick to them.
A higher salary shouldn’t drive you towards spending and borrowing more, instead it should be your stepping stone to a wealthy future.