Three Steps to Giving Yourself a Big Raise in the New Year

| December 31, 2011 | 0 Comments

Today is the last day of 2011, which means I now have two full years of my spending recorded on Mint.com. For the first time in my life, I can compare two full years of my spending against each other, in detail.

My Monthly Spending Chart

Here’s a look at the chart of my spending, comparing 2011 to 2010:

spending2011to2010

Chart of my spending, by month, comparing 2011 to 2010. Yellow is 2010 and green is 2011.

As you can see, my spending in 2011 is lower than it was in 2010 for 9 out of the 12 months. You may be thinking, “Whoa, what happened in May 2010?” You can learn about that in an earlier post, here.

My Monthly Spending Numbers

Since I was already spending less than I made in 2010, all the spending cuts I made in 2011 went straight to my bottom line (net income/savings).  As you can see in the below list of my spending numbers, I spent $7,213.22 less in 2011 than I did in 2010:

spendingnumbers2011to2010

List of my spending numbers, by month, comparing 2011 to 2010.

The Big Raise I Gave Myself in 2011

You may be thinking, “Spending less isn’t the same thing as getting a raise.” Well I disagree with you. I pocketed $7,213.22 more last year than the year before just by spending less. It is an absolute fact that this is a raise I gave to myself. One that I didn’t have to rely on someone else to give to me. I didn’t have to go and get a part time job for it either. I just started paying attention to my spending. It’s a raise that all of us can give to ourselves in 2012.

A Dollar Saved is $1.33 Earned

I just ran the following numbers from my 2010 tax return. I paid just shy of 25% of my gross income last year in taxes. Using that basis, in order for me to get a raise or second job that would net me $7,213.22/year, I would have to earn an additional ($7,213.22 x 1.33) or $9,593.58. At 40/hrs a week, that is almost a $5/hour raise. WOW. That’s a BIG raise I gave myself this year.

How to Make A Raise Happen for Yourself

Here’s the three steps you can take to give yourself a big raise in 2012.

  1. Track Your Spending
  2. Cut Your Spending
  3. Reap The Rewards

Track Your Spending

You can’t improve what you don’t measure. I have described the process I use to track my spending in an earlier post. I have also dedicated a category of this blog to organizing your finances, which is intended to help you get organized and track your financial life. I encourage you to get serious about tracking your spending in 2012 if you want to spend less, save more and get ahead financially in the future. This is extremely important.

Cut Your Spending

Once you are tracking your spending, your next step is to cut the fat in your spending. This is best done by budgeting and telling your money where to go each month, on paper (or digitally), on purpose. This is where the big raise that you’re going to give yourself will come from. I have dedicated an entire category of this blog to Living Cheap, which is intended to help you cut your spending.

Reap the Rewards

Once you have been doing steps one and two for an extended period of time, such as a year, you will begin reaping the rewards. My reward for doing this in 2011 was $7,213.22 greater than it was in 2010. That’s a huge incentive for me to do an even better job of tracking and cutting in 2012.

If you have friends or family members who you want to help motivate to give themselves a raise, please share this with them. Also, I want to wish you and your loved ones a Happy New Year and the best of luck in making 2012 your most prosperous year yet.

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