Let’s face it, times are tough these days. It’s getting harder to find stable work, and many people are struggling to make ends meet. On top of that, we are bombarded with constant marketing messages to buy this and try that… it never ends!
Just imagine for a moment a man named Steve. Steve just graduated college with an art degree and is working a part-time job making ten bucks an hour at Lowes to help pay off his student loan debt. Not bad for a college student but could be better for a graduate. Now, let’s pretend that Steve finally managed to get a decent paying job in his field. Now, he’s making $17 bucks per hour. Huge step up, right? He’s almost making double what he used to. So, what does Steve do? Well, Steve does the exact opposite of what millennials should be doing upon receiving a raise: Spend More!
That’s right ladies and gentleman. The biggest mistake I see millennials make when they land a new, high-paying job is spending more! If you think about it, it might not seem like it would do much harm. Many people think, “Hey, well I’m making more, why not spend more and treat myself, right?”
This is absolutely detrimental to your financial stability. Almost every college student will graduate with debt, whether it be from a student loan, car loan, or credit card debt. If you are working your ass off to pay off that debt, getting a new, higher paying job is a huge asset to you.
The problem is, many people see all of this new money coming in, and aren’t used to seeing such large paychecks. They almost develop a mindset of “well, if I could make it by with what I was making before, then this extra money I’m making can be used for food, or video games, or makeup, etc.”
This may sound logical, or at the minimum, not harmful. However, think about this: If you want your hair to grow out, do you cut it? No, you let it grow. If you want to grow tomatoes, do you cut off the bulbs before they fully grow? No. The same concept applies here.
The same concept applies to money and debt.
If you truly want to pay off your loan and be out of debt as soon as possible (which you should, by the way), then you shouldn’t spend more money simply because you make more! You should instead invest your money, sit on it, and then use that appreciated income to pay off your debt even faster.
So, what should you do if you get a higher paying job? Don’t let the shock and awe of a massive paycheck inspire you to spend more. Keep living how you were, and use the extra dough to become debt free even sooner.
Then, you’ll have a reason to celebrate.
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