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How To Give Yourself A Raise in Five Minutes

By Erik Folgate

That title sounds like a cheesy late-night advertisement where some guy with fake hair makes allegations that you can make $20,000 a month, but he never tells you how to do it. You have to spend $495 to receive his audio book set and the workbook. I have a full-proof way to feel like you received a pay raise without purchasing anything other than a pen and a pad of paper. It’s called a BUDGET. I know what you’re thinking, “tell me something that I don’t know, Erik”. We cringe when we hear the word “budget”. It actually has negative connotations. Have you ever heard someone say with a deflated tone, “Yeah, I’m on a budget” or “that doesn’t fit in our budget”. It’s even possible to be made fun of when you say that you’re on a budget. Your friends or family might label you as a tight-wad or el-cheapo. Why is this? Why is it so bad to budget out your money and take control of it? That is exactly what you are doing. Making your money behave the way you want it to, rather than letting it fly around wherever it wants to go. You’re training your money to behave in a certain way. We train our dogs, we condition our children to act a certain way, but no one ever says, “Gosh, tell your dog to stop behaving so nicely”. A monthly budget is nothing more than spending your money before it is actually spent.

I think the best way to write a budget is at the beginning of the month. Take all of your income and subtract out all of the recurring bills you will pay for that month. If you have no money after this step, than you seriously need to evaluate the monthly bills you are paying and come up with a way to boost your income. Check out my post about Five Side Businesses to start with less than $200. Once you have subtracted out all of the recurring bills, take the rest of that money and separate it out into categories for the essentials. Here are the categories my wife and I separate our money into each month.

  • Food/Groceries (not eating out)
  • Gas
  • Household Products
  • Entertainment (this includes eating out)
  • Clothing
  • Car maintenance
  • Pet Stuff (we have a dog, sometimes this just goes into household or food)

We put a certain amount of money into envelopes with these labels. Then we give each other a certain amount of spending money that we can do whatever we want with. This allows some cash for the little stuff that we buy throughout our week. If you have gone through all of these steps and you have money left over, then you get to save it! You can categorize your savings too, but generally you should put it aside and throw it into a separate account for short-term investment purposes. This is what we do, and we never overdraft. We’re on a tight budget right now because my wife is still in school, so there typically isn’t much left over, but we always have enough money for the essentials and we always have enough money to have some fun, too.

Now, if you have done all of these steps and follow your budget, you’ll find that you have a good deal of money left over at the end of the month! Do you have the syndrome where you get to the end of the month and you have no clue where your money went? Are you confused where it all goes? Well, now you know where it all goes, and you’ll find that you have more income than you thought! It’s a great feeling not to live paycheck to paycheck. When you have money left over at the end of the month, you can save it, have some fun with it, or give it! Any three of these are great ways to use the money that’s left over.

Okay, I lied. The first time you do this, it might take more than 5 minutes, but after a few months you’ll feel like you got a raise in 5 minutes every time you set your budget.

Erik Folgate
Erik and his wife, Lindzee, live in Orlando, Florida with a baby boy on the way. Erik works as an account manager for a marketing company, and considers counseling friends, family and the readers of Money Crashers his personal ministry to others. Erik became passionate about personal finance and helping others make wise financial decisions after racking up over $20k in credit card and student loan debt within the first two years of college.

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  • http://www.dyphan.com Dy

    The title is kind of deceptive. You’re not boosting your income at all, just learning better management and allocation.

  • erik.folgate

    Hey, you’re right. I wrote this post late last night and I what I was thinking in my head was, giving yourself a raise. I changed the title.

    The title is meant to be a little deceptive but not in a malicious way. I think you get the feeling of getting a raise when you budget out your money. Most people find that they have more money left over at the end of month when they budget it out.

    Thanks for the heads up on that, though. My thoughts didn’t translate well to what I was thinking.

  • http://www.dyphan.com Dy

    If you don’t mind, I’ll put a link to your blog on mine. Thanks for replying to the comments!

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  • Mike Woods

    I find that if you replace the word budget with “strategic spending plan” people are more likely to take the advice. Also, people with goals do way better with their money. Great work Eric.
    Mike, Toronto based CFP

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