5 Ways Getting a Raise Could Be Bad For Your Finances

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Editor's Note: This story originally appeared on The Penny Hoarder.

Congratulations! You finally got that raise you’ve been working toward. The extra money in your bank account is going to help secure your finances and get you closer to your goals… right?

Not always. Sometimes the excitement of putting more cash in your pocket on a regular basis can have a bigger influence on your heart, not your brain.

And that can lead to lifestyle creep — when making more money leads to spending more money on the finer things. Like a nicer car, a bigger wardrobe and fancier vacations.

And while treating yourself occasionally is OK — you deserve it! — spending more on things you don’t need and skipping the important financial choices can delay your financial success and maybe even your retirement plans.

So, even though your direct deposits are bigger these days, don’t get distracted by all the shiny new things you can afford now. By making these mistakes, your raise could actually do even more damage to your financial goals.

Mistake No. 1: Not Increasing Your 401(k) Contributions

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When you get a raise, one of the smartest things you can do is increase your retirement savings contributions. If you don’t need the extra cash to pay your bills, you won’t miss it — but you’ll be glad you stashed it away when you see your 401(k)’s growth.

And if your employer matches each contribution, that could mean hundreds of thousands of extra dollars in your account when you retire. It’s free money!

But if you can’t take advantage of this employer benefit because you do need all of your paycheck every month, a company called Lendtable will give you the cash.

We know it sounds too good to be true. But if your employer has a 401(k) match program, this is money they already have earmarked for you. By using Lendtable, you’ll be able to unlock that free cash.

Let’s say you make $50k a year and your employer matches your 401(k) contribution up to 4%. If you put $0 in your retirement account this year, you get $0 from your boss. If Lendtable lends you the 4% of your salary your employer is willing to match, you get $2,000 from your boss, minus Lendtable’s fee. (This comes from the extra money you’ve earned, so there’s no sacrifice on your part.)

It takes three minutes to answer a few questions about your eligibility and sign up for an account.

Once you’ve gotten your full match amount from your employer, Lendtable will take the money they lent you back, plus a small share of your profit. If there’s a penalty from your retirement account provider for taking money out, Lendtable will cover that, too.

The risk for you is basically nonexistent, so not taking advantage of your employer match with Lendtable’s offer would make Future Millionaire You bow your head in shame.

Mistake No. 2: Not Putting More Money Into Your Investments

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When you start to make more money, you might think the smart thing to do is add it to your savings account.

Unfortunately, saving alone may not be enough for you to be able to build your wealth. You’re on the right track, but the money you’re stashing away isn’t growing like it could be.

To retire comfortably, it helps to grow your money. That’s why we like an app called Stash.

You don’t need a ton of money, either — you can get started with as little as $5. You can invest in pieces of well-known companies like Amazon, Google or Apple without having to pony up for expensive full shares of stock.

The best part? Some companies may even send you a check every quarter for your share of the profits, called dividends. If these companies profit, so can you.

It takes two minutes to sign up, and your investments are protected. With Stash, investments are held by their custodian, Apex Clearing Corporation, a member of the Securities Investor Protection Corporation (SIPC) — that’s industry talk for, “Your money comes with protection.”

The sooner you get started investing, the more time your money has the potential to grow.

Mistake No. 3: Not Adding More Money to Your Emergency Fund

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Your emergency fund is an important safety net to have — and when you get a raise, you can reach your goal number faster.

You should be using not just a safe place to stash it away — but an account that can also earn you more money on your savings.

Under your mattress or in a safe will get you nothing. And a typical savings account won’t do you much better. (Ahem, 0.06% is nothing these days.)

But a debit card called Aspiration lets you earn up to 16 times the average interest on the money in your account. Not too shabby!

Enter your email address here to get a free Aspiration Spend and Save account. After you confirm your email, securely link your bank account so they can start helping you get extra cash.

Your money is FDIC-insured and they use a military-grade encryption, which is nerd talk for “this is totally safe.”

Mistake No. 4: Not Protecting Your Family

Mother, father and daughter
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Have you thought about how your family would manage without your income after you’re gone? How they’ll pay the bills? Send the kids through school?

Now that you’ve gotten a raise, it’s a good time to start planning for the future by looking into a term life insurance policy.

You’re probably thinking: I don’t have the time or money for that, even with a raise. But your application can take minutes — and you could leave your family up to $1 million with a company called Bestow.

Rates start at just $16 a month. The peace of mind knowing your family is taken care of is priceless.

If you’re under the age of 54 and want to get a fast life insurance quote without a medical exam or even getting up from the couch, get a free quote from Bestow.

Mistake No. 5: Overspending Because You Can ‘Afford It’ Now

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Just because you’re making more money doesn’t mean you should be spending more.

So, wouldn’t it be nice if you got an alert when you’re shopping online at Target and are about to overpay?

That’s exactly what this free service does.

Just add it to your browser for free, and before you check out, it’ll check other websites, including Walmart, eBay and others to see if your item is available for cheaper.

Plus, you can get coupon codes, set up price-drop alerts and even see the item’s price history.

Let’s say you’re shopping for a new TV, and you assume you’ve found the best price. Here’s when you’ll get a pop up letting you know if that exact TV is available elsewhere for cheaper. If there are any available coupon codes, they’ll also automatically be applied to your order.

In the last year, this has saved people $160 million.

You can get started in just a few clicks to see if you’re overpaying online.

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