3 Mistakes to Avoid After Getting a Raise

3 Mistakes to Avoid After Getting a Raise3 Mistakes to Avoid After Getting a Raise Congratulations - at long last, youve finally been granted the raise you were hoping for. Getting a pay increase can be a great thing in many ways. Not only will it offer you a bit more financial flexibility, but it can serve as a confidence booster and source of pride. That said, youll need to be smart about how you use and react to your income boost. Here are a few post-raise pitfalls youll want to avoid.Now that you have more money coming in, you may be tempted to rethink your budget and start treating yourself to things youd previously been unable to afford. But before you lock yourself into a higher monthly rent payment or lease a fancy car, figure out exactly how much net money your gross raise will translate into.For example, a $5,000 raise wont put $5,000 back in your pocket. If you fall into the 24 percent tax bracket, youll get just $3,800 after the IRS gets its share of your extra cash, which means youll have just over $300 a month extra to work with. Another thing to keep in mind is that a boost in earnings could propel you into a higher tax bracket than youre used to. If that happens, youll keep even less of that increase.The takeaway? Wait at least a couple of pay cycles before spending your newfound cash. This way, youre less likely to overextend yourself.Americans are poor savers by nature, so much so that 57 percent of U.S. adults have less than $1,000 in the bank, while 39 percent have no savings at all. If youre low on emergency cash , the first thing you should do with that raise is save it - all of it - until youve accumulated enough money to cover a solid three months worth of living expenses.If youve already reached that threshold, and you dont have costly credit card debt to get rid of, then your next priority in terms of that raise should be building your nest egg. Rather than spend your increase in its entirety, allocate some of it t o your 401(k), or set aside a portion for your IRA. Getting a raise is a perfect opportunity to boost your long-term savings rate, and if you make a point to set aside at least some of that extra cash from the get-go, you wont get used to having it - and therefore wont miss the money youre using responsibly. On the flipside, if you dont save some of your raise, youll quickly get used to the new budget and lifestyle it buys you, thereby missing the chance to get a jump on more important financial goals.Its natural to work your hardest in the hopes of getting noticed at work and landing a raise . But dont make the mistake of letting your performance falter once youre granted that increase. If your boss comes to landsee that youre no longer making as much of an effort now that youre better compensated, your company might retract that boost or, worse yet, reconsider keeping you on as an employee altogether. Talk about a major setback.Getting a raise is certainly something to celebrate , but dont turn a positive career milestone into a negative. Be smart about how you spend that money and keep up the good work to show your appreciation. With any luck, that raise will end up being just one of many you receive - and use wisely - in your lifetime.This article was originally published on The Motley Fool . It is reprinted with permission.