Congratulations! You finally received the raise you’ve been aiming for. The extra cash hitting your account should help stabilize your finances and move you closer to your objectives… right?
Not necessarily. The thrill of seeing a larger paycheck can sway your emotions more than your judgment. That’s how lifestyle creep happens — when higher earnings translate into higher spending on the nicer things. Think flashier cars, an expanded wardrobe and more extravagant getaways.
While the occasional splurge is fine — you’ve earned it! — blowing increased income on unnecessary items and neglecting key financial moves can slow your progress and potentially push back retirement plans.
So even though your direct deposits are fatter now, don’t be dazzled by all the new purchases you can afford. These missteps could turn your raise into a setback for your financial objectives.
Mistake No. 1: Using Your Raise for Fun Purchases
When your income rises, it’s tempting to justify spending more on enjoyable purchases instead of prioritizing the long term. With some restraint, you can tuck away some of that extra income for your future self.
And you actually don’t need much to get started investing — some platforms even hand out free shares if you sign up the right way.
Whether you have $5, $100 or $800 extra, you can begin investing with Robinhood.
Yes, Robinhood is well-known. Novice and experienced investors alike appreciate it because it charges no commissions, letting you trade stocks without fees — and it’s very user-friendly.
The nice part? When you download the app and fund your account (a process that takes just a few minutes), Robinhood will deposit a free share of stock into your account. It’s random so the value varies, but it’s a pleasant boost to start building your portfolio.
Mistake No. 2: Not Increasing Your Investments
When your pay climbs, you might assume the smart move is to dump the extra into a savings account.
But saving alone often isn’t enough to grow wealth. You’re doing something right by saving, but that cash isn’t compounding the way investments can. To retire comfortably, it helps to grow your money. That’s why an app like Stash can be appealing.
You don’t need a lot to begin — you can get going with as little as $5. Stash lets you buy fractional shares of familiar companies like Amazon, Google or Apple without paying for whole shares. The perk? Some companies may distribute quarterly payouts called dividends. When those companies profit, you could too.
Signing up takes about two minutes, and your assets are held with a custodian. Stash’s custodian is Apex Clearing Corporation, which is a member of the Securities Investor Protection Corporation (SIPC) — industry shorthand for “your investments have a level of protection.”
Currently, Stash will also give you a $5 bonus after you deposit $5 into your account. The earlier you begin investing, the more time your money has to potentially increase.
Mistake No. 3: Not Providing Up to $1,500,000 in Coverage for Your Family
Oh, to be a millionaire. Not everyone can create trust funds for family members. But you can still leave loved ones up to $1.5 million through life insurance — and you don’t need that sum sitting in your bank.
You might think it’s too time-consuming or costly. However, this can be arranged in minutes — and some providers let you provide up to $1.5 million in coverage. One such company is Bestow.
We’ve heard people pay as little as $20 a month.* (Keep in mind, premiums usually rise each year you delay.)
It only takes a few minutes to get a complimentary quote and learn how much life insurance you could leave your family — even if you don’t have a seven-figure balance.
Mistake No. 4: Overspending Because You ‘Can Afford It’ Now
Just because your earnings increased doesn’t mean your spending should automatically follow.
Wouldn’t it be helpful to get an alert while shopping online at Target if you’re about to pay too much?
That’s exactly what this free browser extension does.
Install it for free, and before you finish checkout it compares prices on other websites — Walmart, eBay and more — to see if the item is cheaper elsewhere. You can also find coupon codes, enable price-drop alerts and view price history.
Imagine shopping for a new TV and thinking you’ve found the best deal. This tool will pop up if that exact model is available for less on another site. If coupon codes exist, it can automatically apply them at checkout.
Over the past year, this extension has saved shoppers $160 million.
It takes just a few clicks to install and check whether you’re overpaying online.
Capital One Shopping compensates us when you add the extension using the links provided.
Alex Monroe is a staff writer at Savinly
1 For retirement, Stash provides access to traditional and Roth IRAs.
2 Note that SIPC does not protect against losses from market fluctuations. Apex Clearing Corporation is an independent SEC-registered broker-dealer and a member of FINRA/SIPC.
There’s no certainty any stock will pay dividends during a quarter or year. Dividends may be taxed and are considered taxable income. Refer to the IRS for details.
3 Offer subject toTerms and Conditions. To qualify for the promotion and receive the bonus, you must: (i) complete the required registration to open an individual taxable brokerage account (“a Personal Portfolio”), (ii) connect a funding account (such as an external bank account), AND (iii) make and complete a minimum deposit of at least five dollars ($5.00) into your Personal Portfolio. If you only complete registration for certain services or do not finish opening a Personal Portfolio, you will not be eligible for the bonus.
Savinly is a paid solicitor of Stash.
This material is for informational purposes only. It is not investment advice and does not indicate that any particular securities are appropriate for any specific investor. Investment advice is provided only to Stash customers. All investments carry risk and may lose value. All product and company names are trademarks ™ or registered ® trademarks of their respective owners. Use of them does not imply affiliation with or endorsement by them.
*Bestow: Policies issued by Bestow Life Insurance Company, Dallas, TX on policy form series BLI-ITPOL. Not all Bestow Life Insurance products are offered in every state. Policy limitations or restrictions may apply. Not available in New York. The application asks lifestyle and health questions to determine eligibility and may avoid requiring a medical exam. Prices can start at $10/month based on an 18-year-old male rated Preferred Plus NT for a $100k policy on a 10-year term. Rates vary based on underwriting.
