In an earlier blog post I wrote about the Six Month
Rule. When desiring to make a larger
purchase or have a new payment for example automobile or increase in
rent/mortgage payment you save that payment or the difference in payment for
six months before acquiring your large purchase.
Here is another version of the six month rule to practice in
your life. When you receive a raise or
new job with increase, you don’t use that increase in your regular budget. For six months you take that increase and do
one or a combination of these things: Give, Pay off Debt and Save.
For example you get a raise making $500 more a month. If you are completely debt free, you can use
that money to give to others, give to your local church, give to family
members. There are many times I hear
people say I would like to help my parents, or I would like to give more to my
local church but then when increase comes in our life, we end up spending that
money on ourselves, or not even really seeing a difference in our living, due
to eating out a little more, maybe driving a nicer car, etc. So if you are debt free, try using this money
that you were living without before to help others; your church, family,
friends, etc.
If you have debt, and you receive an increase or promotion,
for the first six months or longer if you will use that money to attack your
debt, you can see some real progress in becoming debt free. Again, you were making it before you had that
raise, I know we all can use more money, but chances are if you are in debt and
receive a raise or promotion you end up getting deeper in debt due to poor
financial choices. How much better would
it be for you to take that money and apply it towards being debt free.
Using the increase for savings is another great way to save
money. Many people would like to save
more money just don’t see how they can do that each month, or save a small
amount and sometimes use some of that money.
Again, since you were making it before your raise, new job, or increase,
why not use the opportunity to save some money and build an emergency fund,
especially if you don’t have any savings, and if you do, to increase the
savings you do have at a faster rate.
Of course you can adjust this six month rule to work for you
and your specific financial situation; you can also do a combination. For
example if you have debt and also the desire to give more, why not use half of
your increase to apply towards your debt and half of your increase to give to
your local church or choice of charitable contribution. Or if you are debt free, saving half and
giving half, whatever works the intent is, instead of just allowing this
increase to absorb itself into your current budget and not really see a
tangible difference, put your increase to work for you. Instead of just going out and getting a
bigger house, or bigger car, and acquiring more debt why not think of others,
or help your parents get new tires for their car, or even a brand new car.
My husband and I have done different variations of the six
month rule at different times in our life and we were very happy with applying
this in our life. We have used an
increase in pay or at times “commissions” (if you are in sales) money that we were not counting on in
our regular budget plan, to attack debt, to give more in our local church, and
at times to save and build our emergency fund.
Too many times we think if we get this raise or new job, our
finances will be better off, only to find, yes it makes things a little easier,
but unless you have a plan and purpose for that increase it is quickly absorbed
into our life with no real difference. Someone taught us this six month rule and it has benefited
our life, so I thought I’d share with you.
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