MANILA - Getting a promotion is one of the biggest breaks of your professional life. It is another step up the proverbial ladder of success, and often means a lot of things: a wider job scope, taking on added responsibilities, having to supervise people, and learning new things.
A promotion might mean moving on to a bigger desk or a better room (or having one for the first time), moving to a new location, and having a new title you can be proud of. Almost always, it also means additional perks and a salary increase.
The changes that a promotion brings your way can be quite overwhelming. Your former colleagues suddenly report to you and look to you for direction. You are suddenly expected to dress and speak in a certain way. You suddenly have a car plan. Credit card companies are suddenly offering you big credit line upgrades. The bank calls to let you know that you can avail of a housing loan. As you go shopping, you discover that the pricey things you always wanted to buy are suddenly more affordable and within your reach.
Indeed, a promotion signals big changes in your life, including the financial front. But after you celebrate on getting your promotion and raise, it’s time to think about how to best prioritize your spending and plan what to do with your added income.
What’s the best way to make the most of the financial gains that accompany a promotion? Here are seven ways to help you maximize those gains:
1. Reassess your finances.
Just because you’re earning more doesn’t mean you can spend mindlessly. After the news of your promotion has sank in, take time to look into your finances. Look into your spending, your savings levels, investments, and debt levels. Knowing this will give you a better picture of where you stand financially--a good way to ensure that you do not suddenly spend so much more than you can afford on the mistaken notion about your financial standing. Doing this assessment will also allow you to plan how you should be spending your money and investing it in order to achieve your life goals.
2. Create a budget.
Based on the reassessment above, create a budget that will work for you, reflecting your new circumstances. Try to think if there are changes or new expenses that you have to create a budget for. Let’s say your new position comes with a new car. This means that you will have to create a budget for gasoline and maintenance expenses. Needless to say, make sure you stick to your budget.
3. Plan your future purchases.
There’s nothing like having a plan to ensure that you stay financially healthy. List down the things you may be planning to purchase with your added income and prioritize which should come first. Would you rather get that new smartphone first or get a replacement laptop first? Remember that there’s no rush to get all these things. Planning ensures that you stay within your budget limits and gives you a healthy cash flow.
4. Pay down debt.
Think about using your additional income to bring down your existing debt—personal loans, credit card balances, and the like. Paying debt is one way to bring down your interest expenses and also helps you achieve financial order.
5. Consider investing.
Instead of spending your money on non-essential items, why not invest your money in an asset that can appreciate in value over time? For instance, you can look into putting money into mutual funds or UITFs every month to let your money grow and outpace inflation. There are many products now available to retail investors, with opening investment levels of as low as P5,000 and monthly increments of just P1,000.
6. Live within your means.
Don’t keep up with the Joneses even if you can afford to. Don’t spend recklessly just because you have more money to burn. Even if you can afford to get a new car, don’t feel compelled to get a new one just because everybody else at your level has a new car. The secret to achieving financial order is being able to discipline yourself against making unnecessary expenditures that can keep you from growing your money.
7. Continue to invest in your skills.
Your promotion is just one step in your professional journey. To ensure that you get ahead, make sure that your skills continue to be relevant and up-to-date with the needs of the market. Don’t be afraid to spend money on upgrading your skills and expanding your horizons. It’s an investment that will benefit you in the years to come.
Grow Your Money is an editorial partnership between ABS-CBNnews.com and Citi Philippines to promote financial education and provide helpful information to Filipinos on how to better manage their personal finances.
Visit www.citibank.com.ph for more information.