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7 Quick and Easy Ways to Give Yourself a Tax-Free Raise

Is money a little tight? Hoping a raise will come through soon? I hate to burst your bubble, but a raise probably won’t do much good, even if it is exceptional. By the time a raise is adjusted for taxes, you’ll be lucky to see half of it in your bank account. And if that’s not bad enough, it’s a common problem that when you earn more, you automatically spend more. Reckless spending can consume a lot of cash fast. 

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The degree of reckless spending seems to rise in direct proportion to income. It won’t be long until you are back in your old financial rut, barely getting by. Sadly, more money will never be enough until you get serious about your spending.

The secret to getting cash inflow to exceed outflow is to reduce the outflow. That is a solution available to almost everyone.

Cutting expenses is not at all difficult once you understand it is like giving yourself a tax-free raise. Every dollar you do not spend is another dollar in your wallet. Or bank account. The challenge is to find realistic yet painless ways to trim spending without creating drudgery or removing the fun from your life.

Even if you do not have a job, you can give yourself a raise.

Live with Cash

Living with cash is a good way to curb mindless spending, except for payments you must send through the mail. It is not easy. In fact, it’s hard. But if you are willing to teach your brain and your attitude to treat this move as you would a job, it will become a very useful challenge.

Studies indicate that cash customers are more mindful of what they’re doing and spend a lot less than those paying with plastic. 

Limit ATM Trips to Weekly

Frequent trips to the ATM and or frequent swipes of that debit card tied to your bank account are like a small hole in the bottom of a boat. That constant leak can quickly lead to capsizing. Plug the leak by developing an envelope system for areas that can get out of control, like entertainment and fast food.

Place the amount you have allotted into an envelope and label it accordingly. Take the money from the corresponding envelope as you go to lunch or a movie. When it’s empty, the money is gone, meanings no more spending until the next fill-up.



Cancel Subscriptions

Study your last bank statement, looking for subscriptions—like streaming services, music service, product and entertainment memberships, and other subscriptions.

Think: Which ones do you use most often? Which had you completely forgotten about? How could you replace it with a free (news, music, entertainment) service? You may be spending a lot each month on stuff you no longer use or want. By cutting unnecessary subscriptions, you can give yourself a small raise every month.

Stop Shopping

Unless you have a specific need and the money to pay for it, don’t wander through the mall or surf the Internet just to see what looks good. Remember this: A true need is never discovered while standing in a store. It is realized during normal living.



Use What You Have

Have you taken a look in your pantry and freezer lately? You may be surprised to see just how much food you have that is already paid for. Use it up before you make another trip to the supermarket.

Before you buy anything new, you should stop long enough to ask yourself this question: Do I already have something that will do just as well for now?

You’ll be surprised how many times the answer is yes. 

Make it Automatic

A solid principle of life says if you don’t see it you won’t miss it. Use that principle to your advantage in building a nest egg. Fill out an “Automatic Deposit Authorization” at your bank or credit union, instructing them to automatically move $25 or $50 each week or two from your checking account into savings.

You might feel the pinch the first or second time that money disappears from your available balance, but soon you will not notice. You will not miss what you don’t see.

Pay off debt

If you’re rolling credit-card balances from one month to the next, you’re paying a lot of interest. Pay off those debts quickly, and do not replace them with new debt. The interest you no longer have to send to creditors is money in your wallet. Yep, just like giving yourself a raise!

First published: 10-09-18; Updated  and republished 08-15-21



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6 replies
  1. Dottie Garrison says:

    Dear Mary. I use my credit card for almost every purchase. I also write it in my checkbook as if I had written a check. Then every week I go to my credit card account and pay the outstanding balance. My card gives me “points” which I redeem for gift cards which I use for Christmas gifts for our children and Grands. We are completely debt free with a fully funded Freedom Account. When our Social Security check arrives, (our only income) our bank automatically transferrs $900 into our FA. I also have a Christmas Club account that automatically takes $100 a month. This pays our annual personal and property taxes. I
    Have followed you from your very first little 2 page paper and because of your encouragement we are enjoying our retirement. Thankfully yours, Dottie G.

    • Mary Hunt says:

      Good job, Dottie. Unforutnately, nearly 70% of people with credit cards do not follow your example. They don’t pay their balance in full each month, can’t take advantage of the 25-day grace period, and enjoy other such benefits. They do not have the options you have. Instead, they are building debt. Sadly most of them got their credit cards assuming they’d be better off for them. Instead, they’re drowning in debt, living paycheck to paycheck and just barely getting by.

  2. x_ray_tech says:

    One habit that may seem small can add up to a nice annual “Bonus.” I use coupons and whatever I have saved on coupons that amount is put into a savings stash as soon as I get home. If I forget to use the coupons at check out I can take my receipt along with the coupons to customer service and they will refund the money in cash. I also add to that savings stash by adding to it the amount I save on things I buy on sale, according to what the full price would have been. If I buy a blouse on sale for say $12 that was originally $40 that is a pretty good boost to my saving stash. And if you take your stash to the bank and add it to a special and interest bearing account then all the more. Thanks for all the tips Mary.

  3. pawandclawdesigns says:

    I got a small unrequested pay raise earlier this year. I didn’t need it (it only accounted to about $200 a month, and we’re currently debt-free save our mortgage) so I bumped our mortgage payment up. It’s amazing what that small increase has done to lower our outstanding principle.

    • Bonnie Saal-Feldbush says:

      That’s great! That $200/month extra really is a decent amount to receive – especially unexpectedly.

  4. Kay Jones says:

    I actually did better with combination of cash and credit card. The card gave me a way to track where the money went. I keep a small amount of cash but by using the card and paying it off every month I saw where I could cut back.


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