Credello: How to Make the Most of Your 2022 Pay Boost

NEW YORK, December 10, 2021 (Newswire.com) - If you're expecting a raise in 2022, you may already be dreaming about how you'll spend it. Of course, funding a nice family vacation or splurging on that new TV might be top of mind. But there are ways to make the most out of your 2022 pay boost that will have positive financial impacts for years to come. 

Increase Monthly Debt Payments 

If you have debt, you're probably looking for ways to pay it down quickly. And adding a bit extra to your monthly debt payments can help you expedite debt repayment, saving you money in interest in the process. 

The right debt payoff calculator can help you estimate how much you can save by upping your monthly debt payments. A calculator can also help you identify savings opportunities and offer strategies for faster debt repayment, like leveraging the debt snowball or debt avalanche. 

Bump Up Your Retirement Contribution 

One of the best financial decisions you can make with a raise is using it to boost your retirement contributions. Often, contributions to a company's 401(k) or 457 are a percentage of salary. So you can easily make a 3% pay increase turn into 3% more in your retirement account. 

Especially if you're not hurting for the extra money, sending your raise right to your retirement account can have a huge impact on your retirement savings. And that means sacrificing the raise in your paycheck today could mean an earlier retirement down the line. 

Add to Emergency Savings 

Having an emergency fund is a critical piece of overall financial health. And the extra money from your 2022 pay boost is the perfect time to start one if you haven't already or increase what you have. 

The recommendation for a fully-funded emergency fund is three to six months of living expenses. But committing to saving your pay increase is a great place to start. Even a few hundred dollars in an emergency fund can be a great buffer against life's unanticipated expenses. 

Give More to Charity 

Increasing your annual charitable giving is an excellent use of a pay raise that will leave you feeling good. Especially if your pay boost bumped you up into a higher tax bracket, giving tax-deductible money to the charities you support could reduce your taxable income, too. 

Make an Investment in You 

A pay increase is an excellent opportunity to invest in yourself. That might be through signing up for an online course, getting a membership at the local gym, or paying to see a therapist. Using a pay boost to better yourself physically, mentally, or emotionally will pay dividends for the rest of your life. 

The Bottom Line 

Remember that a pay raise may not be as much as you anticipated once it hits your paycheck. So it may be best to wait until you receive your first paycheck with the raise in it before you make any firm decisions. That way, you'll know exactly how much money you can afford to put toward different financial goals. 

Source: Credello