4 Things to Consider While Getting a Raise
MILWAUKEE, March 15, 2023 (Newswire.com) - Northwestern Mutual: Getting a raise at work is exciting. Not only is it a reward for a job well done, but it can be a big confidence boost as well. However, it's a good idea to think through a few things, both financially and at work. Here are the four things to consider after getting a raise.
1. What's the best use of the additional money?
It feels obvious that with increasing income comes the opportunity to splurge, and it's okay to celebrate this milestone. But it's also important to consider how to use the additional dollars for goals now and in the future. That could include putting additional dollars toward paying off high-interest debt or adding more cushioning to an emergency fund. For some, it may make more sense to increase contributions to their Individual Retirement Account (IRA) or 401(k) accounts, while for others this might decide to broaden their financial portfolio by taking advantage of the benefits of a permanent life insurance policy, like universal life insurance.
2. What are the tax implications of a raise?
For those who get a raise, it's important to be aware of the tax implications. Depending on the amount of the increase, an individual may end up in a higher tax bracket and owe a higher percentage of their income in taxes the following year. This is something to keep in mind when deciding what to do with a raise. It may help to consult a tax professional or use an online tax calculator to get a sense of the tax implications.
3. Does the raise comes with additional expectations?
While a raise is, in part, intended to be a reward for work already done, some companies may consider this an opportunity to assign additional tasks or responsibilities to an employee. It's a good idea for an employee to ask their manager if they will be tasked with additional work. Understanding the expectations that accompany the raise is beneficial largely because it can help set employees up for success for the rest of the year. On the other hand, if the increase in work is disproportionate to the raise, then employees may want to try to negotiate the new workload with their manager to find a comfortable middle ground.
4. Are other benefits a possibility?
A raise—particularly one that comes with a promotion—may come with other benefits. These could be anything from a hybrid work model and more vacation time to flexible working hours. Depending on the company and responsibilities, some employees may even be able to negotiate additional perks as part of their raise and new role.
Source: Northwestern Mutual