This post contains affiliate links. Purchasing something through the link may give us a small commission or credit at no extra charge to you. Thanks for your support! Visit our disclosures, TOS, and policies page.

I’ve been reading Debt-Proof Living by Mary Hunt. Along with the other financial blogs and financial gurus, I have noticed the recommendation of putting your money to work for you. One of the topics has been about extra income and not letting it get absorbed in everyday living. So I thought about it, “What if I got a $20,000 raise?” What would I do? Would I continue on with my current budget or would I up my standard of living?

Money Increase

You Got a Raise!

So let’s assume we are a family that makes $50,000 a year. Over the last few years, we stopped accumulating debt, paid off the credit cards, and live only on a cash system. We have a basic $1000 emergency fund and are building our fully-funded emergency fund {or contingency fund as Mary calls it} of 3-6 months of living expenses. After all this, I get a better position in my company and my salary will be increased by $20,000!

A $20,000 raise means an extra $1667 a month or $833 bi-monthly. Wow!

Pretend the Raise Did Not happen

We can continue to live on the $50,000 and take the extra $1667 a month and apply it to the Baby Step we are working on. I mentioned the 3-6 month emergency fund above. If our family can live on the approximately $4000 a month income and needs $12,000 for 3 months of savings, that $1667 a month could completed that goal in 7 months! Wow!

Some of my friends who have fully funded their emergency funds tell me that it is one of the hardest steps to get through. Trying to sock away 3-6 months of income can be tedious and frustrating. Getting an extra $1667 a month could rapidly reduce that time.

Upgrade Your Lifestyle

The second option that happens is that there is a sense of relief with extra cash in our paycheck. We feel fortunate and want to congratulate ourselves with our success. We might ignore the budget for a few months and live a little. Oh, we might put in a $100 in our savings here and there, but we might fall into the “I deserve to take a break from the budget,” thinking.


With an extra $1667 would you blow it all on fun? My first response would be, “Heck, No!” If I’m getting an extra $1667, I’m going to live like it didn’t exist and finish pay off my debt, build my emergency fund, or invest it. Approximately $2000 extra a month is a big difference and we can see how that large sum can impact our finances.

What if your raise was only $100 more a month? What would you do then?

Our Reality

In reality, most people don’t get an extra $20,000 a year. Raises {if they happen in this economy} may be 2-3%. It might be an extra $300 a month or just $100 more. I realized that when we received a small raise, we just absorbed it into our living cost. It would go into our checking account and disappear. Instead, I should have put that $100/month to work and told it where it was going. I could have had $1200 more in our savings after a year or $1200 less owed on our home. Whatever the case, it became lost money that should have been treated like the $1667/month I dream about.

When our family makes extra money on side jobs, we immediately put it in the bank and then figure out where to send it. What makes it so easy to dismiss a small, recurring amount, but take notice of the big money?