I have been meaning to write this post since April but procrastination is my thing apparently.
It’s time of the year when most of you have received hikes and in some cases promotions. It’s a great time to revisit how you save/invest.
Once you receive a hike, many would be tempted to increase their standard of living. Got a hike of 10k/month. Great time to put Rs 999 into that subscription of New York Times, spend more on your Starbucks Americanos, donate a few thousands to your favorite gym, right?
DON’T FALL INTO THIS TRAP!
If you have any hopes to achieve FI or FIRE, don’t fall into the trap of upgrading when you don’t require.
Here’s what I follow — whenever I receive a hike I dump most of it into investments.
New investment corpus per month = normal saving + monthly bump after hike
This doesn’t mean that whatever extra you earn now doesn’t help in bumping your lifestyle. If you need to, you gotta do it and not slog it out.
Is your hike really a hike?
While we are discussing about hikes, let me touch on the topic what you should consider a hike.
Many of my friends get excited when they get a 5% hike. If you look at inflation in India for the last 10 years, it has consistently been at around 7-8%. If your salary doesn’t increase at the same rate as inflation, you are in fact losing money. It would help you if you look out for another job.
Another way to look at it, if your salary doesn’t double every 7-8 years you’re doing it wrong.
What’s your story? Did you get a hike? How are you planning to spend it?