3. Invest Your Raise
If you’re fortunate enough to get a raise every year or even every other year, fight the urge to spend this money on stuff you don’t need. Some people take their raises and spend it bigger homes, more expensive cars or lifestyle upgrades. But if you’re on the younger end of the spectrum, extra income can give your retirement account a much-needed boost.
“I believe for most people the best ‘secret’ is to set up a systematic investment plan to invest at least 10 percent of income — and when they get a raise, invest at least half of it,” said Ilene Davis, a certified financial planner and author of “Wealthy by Choice: Choosing Your Way to a Wealthier Future.”
If you don’t get a raise, Davis advises increasing your percent of income saved by at least 1 percent a year, and then invest these savings in a diversified portfolio of stocks.
