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FILE- This Wednesday, June 6, 2018, file photo shows U.S. currently in New York. Some financial planning can help if you have a pay raise on the horizon. A boost in income can benefit all kinds of financial goals, whether you want to upgrade some parts of your lifestyle, pay off debt, save for the future or give back to others. (AP Photo/Ted Shaffrey, File)

Millennial Money: So you got a raise? Here’s what to do with the money

Some financial planning can help if you have a pay raise on the horizon

By CHANELLE BESSETTE of NerdWallet
Published - Feb 06, 2024, 07:09 AM ET
Last Updated - Feb 06, 2024, 10:18 AM EST

Whether it’s a 5% increase or a 20% bump, a pay raise at work is an opportunity to take charge of your financial priorities. A small raise might not seem like much when it’s broken down into a biweekly paycheck, but over time, that difference in income could provide a boost to your lifestyle or be put toward other financial goals.

Whether you decide to pay off debt, pad your safety net, invest, give back, improve your quality of life or treat yourself, a raise is a good time to think about the direction of your financial life.

KEEP AN EYE ON LIFESTYLE CREEP

Many personal finance experts warn against “lifestyle creep,” which is when you begin to spend more as you earn more. Lifestyle creep can take the form of buying more conveniences — like ordering food in more often — or buying more expensive or higher-quality items, like sturdier hiking boots or a better brand of skin care products.

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