What to do with that Raise?

Well if you are like me you might have just gotten a raise that starts in the New Year.  So I’m currently debating what to do with that little extra on each pay cheque so it doesn’t disappear into my monthly spending.  Here are a few ideas along that line.

  1. After my first paycheque in the New Year I’m going to compare my last regular paycheque before I maxed out CPP/EI and transfer the difference  between the amounts into a high interest account while I make up my mind on what do next.
  2. In the short term we are going to need some extra cash for my parental leave in May, so I’m tempted to just sit on the cash until after that has passed and assess the situation after that is done.
  3. I could just roll the money over into my monthly contributions to my wife’s spousal RRSP, which would generate a larger tax refund for next year.  I would like to start to balance out retirement savings a bit more since I’m currently holding most of that money in my name.
  4. If you have already got plans to max out your RRSP contributions, you might want to consider paying down your mortgage faster.
  5. Another option is to top up funding to your child’s RESP accounts to ensure you get the maximum credit from the government.
  6. The last option is to just move the money into a taxable investment account and buy some dividend paying stock(s) and enroll in a DRIP program.  That way your raise is compounding on itself.

I hope that provides a few ideas to everyone.  If you have another idea, please leave a comment and share it.

5 thoughts on “What to do with that Raise?”

  1. You know, I only got a .40 cent raise in the fall, but I never thought of using that extra money differently. I have some travel plans this year, credit card debt (not much), and student loans.

  2. Melissa,

    Raises tend to vanish very quickly if you let them. I know I’ve had it happen to me in the past. So that is part of the reason I wrote this post, to help me understand my options.


  3. setup an automatic savings plan with ING (or equivalent) to move the differential into a separate account.

    In our case, it will be used to build up our savings fund again after a rough 2007.

  4. If you have a home mortgage, you may consider putting the extra $ on increasing your payments. I do this and the years are just dropping off the length of the mortgage. Although you do have to weight the advantages against other items such as a RRSP to see what gets you a better return for your money. But for me in the end, I decided for my future peace of mind I would do the mortgage option even though the RRSP option gave a slightly better return. I want that mortgage gone as soon as possible.

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