Everything will get better once you have a little more cash flow. That's what we often tell ourselves, and it's hard to argue. Getting a raise is absolutely something to celebrate — but it's also more important than ever to review your finances once it comes.
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Aaron, a blogger for Personal Finance for Beginners, shared a story in MarketWatch this week about a counterintuitive subject: the money struggles he faced after a salary bump at work. Rather than finding it easier to organize his spending, he drifted into what he calls "lifestyle creep." "Without the right financial framework in place, it's easy to start living beyond your means," he writes, "meaning you'll either find yourself accumulating debt or spending your entire paycheck without planning for the future."
Asking for a raise is tough enough. If you're a woman, things get even harder: New research posted in the Harvard Business Review shows that while all genders ask for raises at about the same rate, women are far less likely to actually get them. That's a big problem in your earliest earning years, even if you manage constant incremental raises rather than big leaps forward.
You don't have to level up on spending just because you're earning more, however. In fact, Aaron advises that getting a raise is the perfect moment to conduct a thorough overhaul of your spending and saving habits. Rather than creating new, higher expenses (unless they're necessary), consider using your raise on big one-time purchases. After all, millennials aren't actually as bad with money as we're made out to be. You can be responsible and treat yourself all at the same time.