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4 vital steps to maximise your pay rise

Congratulations you secured a pay rise. Here are four steps to help you make the most of your pay boost.

Compilation image of people sitting on steps and a pile of $100 notes to signify pay rise
Without a financial goal, it's easy to get carried away when you score a new pay rise. (Source: Getty) (Samantha Menzies)

If you’ve snagged a pay rise, either with your current employer or by scoring a new higher paid job elsewhere, so you’re probably feeling pretty good about the extra cash in your pay packet. But, it’s important to act fast to avoid lifestyle creep.

Lifestyle creep happens when we gradually adjust our lifestyle expenditure to a higher level of income without even really noticing.

Also by Emma Edwards:

Here are four tips on how to ensure you maximise every last cent of your pay rise.

1. Work out how much you’re actually taking home

The most important first step when you get a pay increase is to understand what your new take home pay actually is, factoring in your new tax amount and any increased payments to HECS/HELP loans.


You can do this by plugging your salary into Be sure to select the variables that apply to you, like whether or not it includes superannuation, and whether you’re paying back a HECS/HELP loan.

Check how often you’re paid and make sure you understand the immediate difference you’ll see on payday.

2. Get clear on your priorities and goals

Once you’re clear on how much extra money you’ll see in your bank account, next you need to decide where to spend the extra cash.

Extra pay can easily get absorbed into your normal routine, leaving you no better off despite your higher salary.

Firstly, note down any financial challenges you’re currently facing. For example, higher rent or mortgage payments or a loan you’re repaying.

Next, note down any financial goals you’d like to work towards, or perhaps already are working towards. For example, saving up an emergency fund, saving a deposit, or saving up for a holiday.

Lastly, note down any lifestyle goals or aspirations you have. For example wanting to start going to pilates or a gym, taking up paddle boarding, learning a new skill, or exploring new foodie destinations.

3. Explore different ways of deploying your extra income into various areas of your life

Once you’ve got your three lists, we need to look at the value of your pay increase from a few different perspectives.

Go back to – or calculate manually – and work out what your pay increase looks like per week, per month, per six months, and per year.

As an example, a pay rise from $60,000 to $80,000 (assuming this is for a full-time role in the 2022/23 financial year and exclusive of superannuation or HECS/HELP debt) could look like:

  • $251 per week increase in take home pay

  • $1,090 per month increase in take home pay

  • $6,500 per six months increase in take home pay

  • $13,000 per year increase in take home pay

From here, cross reference these figures to your three lists, and write down a few different expressions of your pay increase and how it could impact your life.

For example, if you have $4,000 left on a car loan, your pay rise could help to pay off your loan in less than four months.

Equally, if your goal is to save $10,000 for travel, you could realise that goal in as little as nine months.

On the same token, say your home loan repayment has increased by $500 a month, but you’re still keen on that travel goal. Your raise could cover your higher home loan repayment and also get you to your travel fund goal in around 18 months, if you split it between the two.

4. Decide how best to maximise the impact

Looking at your pay increase by week, month, six months and by year helps to clarify what extra income to expect and what you could do with that extra money.

Giving yourself the freedom to explore how to get the most value from any pay increase can help you avoid lifestyle creep and ensure you’re using the money to hit your goals and priorities.

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