How to stop living paycheck to paycheck post-pay increase

June 07, 2021

Use our guide to learn how your pay increase can help you cultivate financial stability and break bad habits.

A new job, a promotion, or even yearly merit reviews, can mean an increase in pay which can be an exciting step in your career, opening the door to new challenges and added responsibilities. There are many benefits that come with career growth, and the financial advantages are a plus. But before making any major purchases with your increased paycheck, it’s important to set intentions for how this money can be a reflection of your values and goals. Here are three considerations to keep in mind post-pay increase.

 

Save a percentage of monthly income

Prior to your promotion, you may have been stretched thin financially. Monthly expenses like rent, utilities, health and car insurance, and groceries can quickly add up, leaving little leeway for savings or other financial goals. While it can be a bit of an adjustment to suddenly have more financial flexibility, it’s also a wonderful opportunity to gain new momentum toward building up savings and empowering yourself in the process.

If you’ve already been budgeting carefully, continue to stick it, while skipping purchases that don’t align with your plan. With the new added income, it may be tempting to indulge in fun or nonessential items, which is fine on occasion. But to set yourself up for true financial stability, you’ll want to establish a plan for where this money is going.

Determine how much of your monthly salary you aren’t putting toward essential costs, and aim to put most of the money from the raise toward savings. By choosing to allocate a certain percentage of your new income toward your savings, over time you’ll build a financial cushion that you can rely on for emergencies, educational pursuits, home ownership or other important costs.

 

Identify and cut out bad habits

Now that you have more income, you have the opportunity to take new approach to old spending patterns that may no longer serve you. For example, if you’re a frequent shopper but buy fast fashion or inexpensive items that aren’t designed to last, now is the perfect time to reevaluate what’s really a sensible purchase. Try to invest in high quality items that you’ll use for years. Mindless spending can make a dent in your wallet, and bringing more awareness to your habits will allow you to reduce unnecessary purchases and grow your wealth.

If you weren’t able to tackle debt in the past (whether it’s student loans, credit card costs or other repayments) now is a good time to start. Depending on the amounts you owe, eliminating debt won’t necessarily happen overnight, but creating a steady plan will gradually bring you closer to being debt free. When it comes to choosing a strategy, start by prioritizing paying off debts with high balances or high interest rates. Find the right debt management technique for you.

 

Consider long-term goals

Once you have a sense of stability with your day-to-day expenses and are able to comfortably pay for essentials without overspending on unnecessary purchases, you’ll want to reflect on your values and goals. In the past, you may not have been able to contribute toward funds for vacation, retirement, home renovation, charitable giving or other personal objectives.

Now that you have the means to do so, decide what is most important. Making a list of your top three long-term financial goals and contributing to each accordingly is a great way to get started. If one goal is more time-sensitive than another, you may want to put a larger percentage of income in that bucket, knowing you’ll have more time to contribute to your other funds over time.

 

 

New to budgeting? We’re here to help! Create a monthly plan that works for you with these three steps.

Related content

Evaluating interest rate risk creating risk management strategy

6 things to know about long-term care insurance cost and benefits

Military homeownership: Your guide to resources, financing and more

Do I need a financial advisor?

How to plan and save for adoption and in vitro fertility treatment costs

Preparing for retirement: 8 steps to take

Employee benefit plan management: trustee vs. custodian

Car shopping: Buying versus leasing your next vehicle

For today's homebuyers, time and money are everything

How I did it: Bought a home without a 20 percent down payment

Money Moments: Tips for selling your home

Should you buy a house that’s still under construction?

5 things to consider when deciding to take an unplanned trip

Certificates of deposit: How they work to grow your money

Stay committed to your goals by creating positive habits

5 tips for being a great board member

How I did it: Joined a board of directors

What financial advice would you give your younger self?

10 ways to increase your home’s curb appeal

Webinar: CRE technology trends

What you should know about buying a car

Credit: Do you understand it?

5 things to avoid that can devalue your home

9 simple ways to save

3 awkward situations Zelle can help avoid

Here’s how to create a budget for yourself

Real world advice: How parents are teaching their kids about money

Money Moments: How to manage your finances after a divorce

Helpful tips for safe and smart charitable giving

Money Moments: 8 dos and don’ts for saving money in your 30s

Travel for less: Smart (not cheap) ways to spend less on your next trip

Understanding guardianship and power of attorney in banking

What’s in your emergency fund?

What you need to know about renting

From LLC to S-corp: Choosing a small business entity

How to reward employees and teams who perform well

6 tips for trust fund distribution to beneficiaries

How to build wealth at any age

How to manage your money: 7 tips to improve your finances

LGBTQ+ financial planning tips

Investment strategies by age

Should I itemize my taxes?

Your 5-step guide to financial planning

What is Medicare? Understanding your coverage options

5 financial goals for the new year

Retirement savings by age

Annual insurance policy review checklist

Allowance basics for parents and kids

How I did it: Turned my side hustle into a full-time job

Retirement plan options for the self-employed

5 reasons why couples may have separate bank accounts

It's possible: 7 tips for breaking the spending cycle

Closing on a house checklist for buyers

Multiple accounts can make it easier to follow a monthly budget

Is it time to get a shared bank account with your partner?

Don’t underestimate the importance of balancing your checking account

7 steps to keep your personal and business finances separate

Which is better: Combining bank accounts before marriage — or after?

30-day adulting challenge: Financial wellness tasks to complete in a month

Estate planning checklist: 8 steps to secure your legacy

8 steps to choosing a health insurance plan

Key milestone ages as you near and start retirement

How to build a financial plan that covers your savings and expenses

High-yield bond issuance: 5 traits lawyers should look for in a service provider

How I did it: Switched career paths by taking an unexpected pivot

Estate planning documents: Living trusts vs. will vs. living will

Why estate planning is important

How a Health Savings Account (HSA) can benefit your retirement plan

Year-end financial checklist

Trends in economics, immigration and mobility policy

Putting home ownership within reach for a diverse workforce

Administrator accountability: 5 questions to evaluate outsourcing risks

Finance or operating lease? Deciphering the legalese of equipment finance

Buying or leasing? Questions to ask before signing a contract

Easier onboarding: What to look for in an administrator

Insource or outsource? 10 considerations

The secret to successful service provider integration

4 questions you should ask about your custodian

Refining your search for an insurance custodian

Service provider due diligence and selection best practices

Complying with changes in fund regulations

Business risk management for owners of small companies

Evaluating interest rate risk creating risk management strategy

Webinar: CSM corporation re-thinks AP

Webinar: AP automation for commercial real estate

Addressing financial uncertainty in international business

Safeguarding the payment experience through contactless

COVID-19 safety recommendations: Are you ready to reopen?

5 winning strategies for managing liquidity in volatile times

The surprising truth about corporate cards

The future of financial leadership: More strategy, fewer spreadsheets

Unexpected cost savings may be hiding in your payment strategy

Choosing your M&A escrow partner

Tapping into indirect compensation to recruit foreign talent

Why other lenders may be reaching out to your employees

High-cost housing and down payment options in relocation

Why retail merchandise returns will be a differentiator in 2022

Work flexibility crucial as municipalities return to office

Overcoming the 3 key challenges of a lump sum relocation program

Crypto + Relo: Mobility industry impacts

For today's relocating home buyers, time and money are everything

Webinar: CRE Digital Transformation – Balancing Digitization with cybersecurity risk

How to sell your business without emotions getting in the way

Empowering team members

5 steps to take before transitioning your business

10 tips on how to run a successful family business

Business tips and advice for Black entrepreneurs

Talent acquisition 101: Building a small business dream team

Costs to consider when starting a business

How to test new business ideas

The role of ethics in the hiring process

8 ways to increase employee engagement

The costs of hiring a new employee

How to hire employees: Employee referral vs. external hiring

Give a prepaid rewards card for employee recognition

Checklist: Increase lead generation with website optimization

Is your restaurant Google-friendly?

How to expand your business: Does a new location make sense?

3 simple brand awareness tips for your business

How a small business owner is making the workplace work for women

5 principles for avoiding ethics pitfalls on social media

5 tips for helping employees raise ethics concerns

The growing importance of a strong corporate culture

7 uncommon recruiting strategies that you may not have tried yet

Business credit card 101

Meet your business credit card support team

How to apply for a business credit card

How jumbo loans can help home buyers and your builder business

Break free from cash flow management constraints

5 tips for managing your business cash flow

Improve online presence your business

How Shampoo’ed is transforming hair and inspiring entrepreneurs

The San Francisco bridal shop that’s been making memories for 30 years

How Al’s Breakfast is bringing people together

In a digital world, Liberty Puzzles embraces true connection

Celebrity Cake Studio’s two decades of growth and success

How a travel clothing retailer is staying true to its brand values

How to build a content team

Use this one simple email marketing tip to increase your reach

How (and why) to get your business supplier diversity certification

Multigenerational household financial planning strategies

How to track expenses

How to manage your finances when you're self-employed

Good debt vs. bad debt: Know the difference

Good money habits: 6 common money mistakes to avoid

Reviewing your beneficiaries: A 5-step guide

How to talk about money with your family

Financial steps to take after the death of a spouse

Retirement advice: How to retire happy

Retirement income planning: 4 steps to take

Preparing for retirement: 8 steps to take

Working after retirement: Factors to consider

4 steps to finding a charity to support

Year end tax planning tips

Tips for navigating a medical hardship when you’re unable to work

11 essential things to do before baby comes

Webinar: Uncover the cost: Starting a family

Preparing for adoption and IVF

Checklist: 10 questions to ask your home inspector

Resources for managing financial matters after an unexpected death

What you need to know as the executor of an estate

What documents do you need after a loved one dies?

Checklist: financial recovery after a natural disaster

How does money influence your planning?

The A to Z’s of college loan terms

Co-signing 101: Applying for a loan with co-borrower

Practical money skills and financial tips for college students

How to build credit as a student

5 things to know before accepting a first job offer

How I did it: Paid off student loans

Bank Notes: College cost comparison

5 tips for creating (and sticking to) a holiday budget

Growing your savings by going on a ‘money hunt’

Working with an accountability partner can help you reach your goals

Does your savings plan match your lifestyle?

Uncover the cost: Wedding

Uncover the cost: International trip

Are savings bonds still a thing?

Tips to overcome three common savings hurdles

Adulting 101: How to make a budget plan

Personal loans first-timer's guide: 7 questions to ask

Mindset Matters: How to practice mindful spending

How can I help my student manage money?

You can take these 18 budgeting tips straight to the bank

Do you and your fiancé have compatible financial goals?

U.S. Bank asks: Transitioning out of college life? What’s next?

U.S. Bank asks: Do you know your finances?

Personal finance for teens can empower your child

How to save for a wedding

Dear Money Mentor: How do I set and track financial goals?

Lost job finance tips: What to do when you lose your job

Money Moments: 3 smart financial strategies when caring for aging parents

Money management guide to financial independence

7 financial questions to consider when changing jobs

5 tips to use your credit card wisely and steer clear of debt

How to stop living paycheck to paycheck post-pay increase

Practical money tips we've learned from our dads

6 ways to spring clean your finances and save money year-round

How to cut mindless spending: real tips from real people

How to increase your savings

Bank from home with these digital features

How grandparents can contribute to college funds instead of buying gifts

How to open and invest in a 529 plan

Using 529 plans for K-12 tuition

Parent checklist: Preparing for college

What to consider before taking out a student loan

5 tips to use your credit card wisely and steer clear of debt

How to use debt to build wealth

Crypto + Homebuying: Impacts on the real estate market

House Hacks: How buying an investment property worked as my first home

Managing the impacts of appraisal gaps in a hot housing market

Your guide to breaking the rental cycle

4 ways to free up your budget (and your life) with a smaller home

Beyond the mortgage: Other costs for homeowners

10 questions to ask when hiring a contractor

How to spot a credit repair scam

5 unique ways to take your credit card benefits further

Take the stress out of buying your teen a car

Questions to ask before buying a car

Disclosures

Start of disclosure content

Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, Home Equity and Credit products are offered through U.S. Bank National Association. Deposit products are offered through U.S. Bank National Association. Member FDIC.