Advice - what to do with a £10k pay rise

The_Real_Cheddar_Bob

So my basic salary has just been increase by £10k. I am concerned i will now spend more because i feel more "wealthy".

I've just cancelled the two credit cards i had with no balance on them,

Has anyone got any advice of how to avoid wasting money and removing the benefit of the increase?

jamiex

Here are a couple of options:
Open a few regular savings accounts. There are still a few around paying good rates of interest.
Contribute more to your pension, by salary sacrifice if you can. Depending on your tax band, you'll save 32% or 42% tax and national insurance.

The fact you're on here worried you'll spend more, means that you probably won't spend too much more. Though you can use a little of your extra pay to have some fun without feeling too guilty.

darkidoe

"Paying yourself first" with
Regular Savings Accounts: Really great way to siphon off the money automatically before you even have the chance to see your balance.
Pensions Contributions: As above, great for tax relief.

Budgeting, setting up a 'spending' current account where all your spending in a month come out from, which you pay into a set budget for spending for the month.

Keep a track of how much you save a month by joining the The "Save 12k in 2017" Thread!. Keeps you accountable to yourself.

justme111

Congratulations:)
Do standing orders out of your current account for whatever your financial goals are :
- regular savings accounts which on maturity you could convert into either bank accounts where you save money for emergenccies oh house deposit or whatever else
- pension which you would forget about till you are 50 and then looked at it at 50 and hopefully realised you can retire now.
- S&S ISA - so that you have money to use for whatever - quitting a job that gets you down, trip to stratosphere , wedding present for your child etc

PeacefulWaters

Pension.
Employer share schemes.
Payroll giving to a charity you value.

But you only live once.
Better car. Better holidays. More comfortable house.

enthusiasticsaver

Great suggestions above already. Whenever I received extra money for any reason, gift, bonus etc we split it and I think I would do the same if I were you?

Maybe allocate a percentage you wish to put aside for short term (holiday maybe?) and save in a regular saver. Same goes for new car, home improvements. Regular savers are great for that particularly if it is a payrise rather than a lump sum. You can get 5% deals in First direct, nationwide and probably others. Check best buys on savings page on this forum.

I think with a substantial payrise like this allocating some monthly amount for the future is sensible like paying off mortgage early (assuming you have no other debt), saving for retirement or for your kids future if you have children.

Great vehicles for long term savings are

Pay extra into your occupational pension particularly if your employer also contributes up to a certain level. Very tax efficient.

Take out an additional pension by way of a SIPP and/or stocks and shares isa or LISA if you are eligible.

atush

jamiex wrote: »

Here are a couple of options:
Open a few regular savings accounts. There are still a few around paying good rates of interest.
Contribute more to your pension, by salary sacrifice if you can. Depending on your tax band, you'll save 32% or 42% tax and national insurance.

The fact you're on here worried you'll spend more, means that you probably won't spend too much more. Though you can use a little of your extra pay to have some fun without feeling too guilty.

Do this..............

But you can budget a small amount to save for an extra luxury for your hard work. Such as a holiday etc.

The_Real_Cheddar_Bob

thanks everyone. I currently put £500 into a stocks and shares isa on a monthly basis. What I don't want to happen is further spend and not add any additional savings.

I will speak to our work IFA next week and look at further salary sacrifice and pension contributions. I will contribute more to our savings, but look at another vessel, just for safe keeping like NS&I bonds.

Of course, my wife and I will try to enjoy the extra, but I have come from bankruptcy and I am worried about spending too much, not that this was the reason for my bankruptcy, but is made me cautious with money.

dawyldthing

Id also put some into things you can't access immediately so then it makes you think if you do need it. Like I have a fair bit of my savings in premium bonds as it makes me think twice before using them

The_Real_Cheddar_Bob

dawyldthing wrote: »

Id also put some into things you can't access immediately so then it makes you think if you do need it. Like I have a fair bit of my savings in premium bonds as it makes me think twice before using them

Yes, the S&S ISA i have takes 2 weeks or so to make a withdrawal. I found this out when taking out funds to clear my wifes pcp car, well pay the dealer to take it back!

Apodemus

PeacefulWaters wrote: »

...Better car...

Don't do it! That's a slippery slope for sure!