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Why Half Of Your Salary Raise Should Go Towards The Future

Because tiny drops make a mighty ocean!!

There are a thousand ways to spend your salary hike, but one good idea is to set aside half of your annual increment for the future. In other words, save and invest it wisely.

Why set aside half of your increment for your future?

Saving and investing is done for your immediate needs, some needs a few years from now and some that are more than a decade away. An increment means two things for you:

#1. Your present situation and lifestyle can improve

Let’s say you want to move closer to your office because your commute is horrendous or you want a car. Your present can become better by whatever degree your increment allows it.

#2. You can reach your long term goals faster by investing more

Maybe, you would like to stop working and pursue your lifelong dream of travelling the world or help the underprivileged. If you’ve already started investing for this dream, your increment can help you get there faster if you increase what you invest every month.

Is there a middle path?

You need to find a balance between taking care of your present and your future. Therefore, 50% of your increment should ideally go towards making your present better and the remaining half should go towards bringing your future dreams closer to reality, faster.

So where should 'my future money be invested?

It may be confusing what you should invest for. If you are just starting out, then this article will help. Considering that most of us don’t nearly have enough to save for all goals at the same time, the following order can help you decide what you should save for first:

#1. Money for unknown and sudden emergencies.

#2. Money for long term dreams such as your retirement.

#3. Money for goals that are coming up in the next 5 years.

If you want to learn more about the four kinds of money that can help you reach your goals, read about it here.

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