How to Not Blow Your Raise

saving concept

Book a cruise. Buy a new car. If you get a pay raise, your mind can start to wander. But, before you start thinking of all the short-term ways to spend your loot, long-term savings can give you more cash later when you need it.

Here are a few ways to get more bang for your buck.

Open a GIC

A guaranteed investment certificate lets you save money for a specific time period. You can lock in an interest rate and the interest can be compounded annually.

Let’s say you live in Ontario. If you take $1,000 and put it in a GIC for five years, you could earn three percent interest. (See below). At the end of the five year term, that comes out to $1,159.27.

Use the GIC calculator to figure out the money you can make with a GIC.

Pay Off Your Debts

Carrying high debts and credit card balances can bring your credit score down. But, paying down your debts can improve interest on mortgages and auto loans.

Here are a few ways to pay down debts:

  • Pay off the credit card with the highest interest rate first(avalanche effect).
  • Pay off all small credit cards and then use payments toward higher debts (snowball effect).
  • Transfer all debts to a low-interest balance transfer credit card and make payments on the smaller amount.

Save Money in an RRSP

Opening a registered retirement savings plan (RRSP) is a great way to save long-term for your future. And, using a tax-free account can increase your savings. Based on the Canada Revenue Agency guide, you can open an RRSP anytime before age 71. For 2019, the maximum you can contribute is $26,500.

With your RRSP, you can invest in:

  • Stocks and bonds.
  • GICs and mutual funds.
  • Segregated funds.

Let’s say you put in $1,000 at age 26 this year. At age 71, you will convert your RRSP to income. Assuming a five percent return annually, you would have an estimated $8,985. That’s based on compound interest annually.

Want to set up an RRSP or see how much interest you can earn in your area? Click on the image or click here.

Treat Yourself

Treating yourself to something is important. Psychologically, you are rewarding yourself for your hard work. But, when you’re deprived, it feels like you’re beating yourself up. That’s why a reward – – even a small one – – puts you back in balance.

Here are a few ideas:

  • Update your wardrobe: Now that you’ve received the promotion, dress for the part. You’ll also demonstrate that you’re ready for that next future work opportunity.
  • Advance your education: Go back to school or take a class. Learn a new language or get your real estate license. Take a fun cooking class. Or, take dance lessons. And, advance your computer skills for more work opportunities.
  • Start a DIY project: From building a new shelf to learning a new recipe, a new project can give you self-fulfillment.
  • Splurge on something fun: A reward doesn’t need to be expensive. Put a deposit on a vacation package for next year. You can save towards it and use your travel rewards credit card for extra perks. Some travel rewards credit cards will give you $750 in travel or four free nights at a hotel.

Want to Earn Even More Money?

Getting a raise or promotion is exciting. But, before you spend your future windfall, map out ways to invest it. You’ll have more money long-term, you can pay down debts and splurge on something nice. For help with opening GICs and RRSPs or if you have questions, contact

With, you can compare rates from the best banks in Canada. And, then treat yourself to something nice – You’ve earned it! Contact today!

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