Certainly, as my mom’s experience of poverty early in her life taught her, having less money than you need buys misery.
Then there’s that research people love to bandy about, that they claim proved happiness stops increasing once you earn $75,000/year.
3 Important Reasons Your Happiness Depends on Your Next Raise
Your next raise will determine whether your income keeps up with (or better yet, outpaces) that inflation.
If it doesn’t, you’re looking at a grim choice – tighten your belt or reduce your savings rate (and if it’s already at 0%, drawing down savings or going into debt). Unhappy results all.
Your Next Raise Does More than Increase Your Immediate Income
It raises the bar for all your future paychecks and all your future raises. If you get a 10% increase now, and another 10% next year, that second 10% builds on the first one, so it’s actually 11% relative to your last paycheck.
If you start from $50,000 and get a 10% raise each year for 10 years, your first raise gives you an extra $5000, but your 10th raise gives you almost $12,000. If you didn’t get that first raise, and did get the next 9, the 9th would be worth $1072 less.
Do as I Suggest and Accelerate Your Journey to Financial Freedom Without any Belt Tightening
Budgeting is no fun (at least for normal people).
The only thing less fun is cutting expenses and living a more frugal lifestyle (again, for most people).
Think from your boss’s perspective – she doesn’t care about what you need or want (e.g., that your commute costs jumped 60% in the past year) – she cares about how you improve the company’s bottom line.
Once you know how important that next raise is to your happiness, present, and future, you’ll be well-armed to overcome any trepidation in pursuing the biggest raise you can achieve. Then, the bonus points will help you strategically pursue it.