What we did with a $27,000 pay rise
From June to July this year, my husband and I were both very fortunate to receive a pay rise: an increase of $14,000 for my income, and an increase of $13,000 for his. Our last combined pay rise had been $6000 in 2019 (a story I share in the first edition of my book), so we were stoked to have more than quadrupled this number with a combined pay rise of $27,000!
So what did we do with it? Here are the four things we did with our extra income.
Sponsored a child
I’ve always wanted to sponsor a child. Prior to quitting my banking job, I managed to sponsor a child briefly before giving up my main source of income at the time for the sake of my mental health. With my $14,000 pay rise, I was delighted to be in the position to sponsor a child again! I signed back up to World Vision’s child sponsorship program and am now the sponsor of a 9 year old girl in India, helping to provide clean water, nutrition, education, healthcare and hope to her and her community for $50 per month.
Started studying
I graduated with my Bachelor’s degree almost a decade ago, and had been wanting to study again to learn something new, upskill, and gain another qualification that might help me further my career. I signed up to study a national certificate through Open Polytechnic, an institute that offers online and distance learning. While I have always needed to pay for my studies with a student loan, this time I simplified the process by paying cash for my first course, which was $500. The next course is $600 and the course after that $800, which I will also pay cash for - skipping over all the paperwork otherwise required in the process. It is refreshing being able to skip all the admin and not have to rely on Studylink to help pay for my studies! Bonus: completing my certificate online means that I’ve been able to study during evenings and weekends, so that it doesn’t disrupt my work at all.
Increased our savings
Although we managed to save 40% of our income while we were saving for our wedding and honeymoon, since getting married, we’d returned to our default saving strategy of 20% per the 50/30/20 rule. After we got our pay rise, we created a new savings account called ‘10%’.
Now, every fortnight when we get paid, we send 20% to our savings as usual - then send an extra 10% to this account. We do our best not to touch it, using it only if an important, unexpected or urgent expense comes up, and at the end of the fortnight, we send whatever is left to our savings.
This has worked incredibly well, and means that we are now saving 25% to 30% on average while always saving at least the minimum, fixed amount of 20%!
We’ve also increased our savings slightly with another new account…
Started a baby fund
Yep! We recently made the big decision to start a family in 2022/23, and have started a baby fund!
We are starting small, with $100 per fortnight going to our new savings account (named ‘Baby’, featuring a cheerful baby smiling adorably). Over the next year we’ll create a new budget, accounting for things like new baby expenses, specialist appointments, maternity clothing, prenatal supplements, and living on a reduced income. While we definitely have a lot to learn, we’re feeling very hopeful and excited for what’s to come.
If you’ve also received a pay rise recently, I hope this has given you some ideas on how to spend it meaningfully. Of course, if you haven’t quite figured that out, you can always do what my husband did with his $3000 pay rise in 2019: hide the pay rise from yourself! Simply calculate the actual dollar amount difference between your previous net (after tax) income and your current net income. Then, set up an automatic payment to send that exact dollar amount from your chequing account to your savings account every pay day. You’ll avoid the slippery slope of lifestyle inflation, while boosting your savings rate!
I hope this has been helpful. If you have any thoughts, please feel free to comment below, or contact me on Instagram at @mindfulwithmoneynz.
Sophia
