Canadian wages expected to increase…..sort of!
And when it comes to our professional lives, there really is no better leg-up than a pay raise.
For many Canadian workers, a wage increase just may be in the books in 2016. According to a recent survey by human resource firm Morneau Shepell, Canadian employers expect to raise wages by an average of 2.5% in 2016.
In fact, the survey found that:
- Employers forecast wages to raise by 2.5% in 2016;
- This is less than the 2.8% wage increase expected for 2015; and
- Wage hikes are expected to be higher in Alberta and British Columbia.
While this may come as good news for some Canadian workers, Jeff Schwartz, executive director of Consolidated Credit Counseling Services of Canada, warns that a pay increase can often be a double-edged sword.
“On the one hand you’re going to be making more money, which is great,” says Schwartz. “But that feeling of financial well-being can go to your head and lead to some poor financial choices.”
“It’s easy to get caught up in the financial windfall before it even hits your bank account. The trick to making your raise work for you is to plan properly and make wise spending decisions,” adds Schwartz.
If you’ve received an increase in pay, Schwartz and the team at Consolidated Credit offer these tips to keep your priorities in order and make smart financial choices:
1. Give it time. Before you run out and make an extravagant purchase, it is wise to wait a few weeks to see what your wage increase really looks like. After taxes and other payroll deductions, the windfall may not be as large as you originally thought. The last thing you want is to heap on a pile of debt when you can’t actually pay for it.
2. Revisit your budget. Anytime you have an increase in cash flow, you need to reevaluate your budget. And if you don’t already have one, now is the time to start. Once you have added the wage increase to the income side of your budget, take a close look at your expenses and consider where this raise will do the most good.
3. Pay down debt. If you are carrying any kind of debt, now is the time to address it. Even the smallest increase in salary can make a huge impact on your debt levels. By living frugally and dedicating this extra cash to debt repayment you will pay less in interest, reduce financial stress and build a healthier financial future. There are a number of debt repayment strategies. Research them all and chose the plan that works best for you.
4. Boost savings. Once your monthly expenses have been met, it is time to take a closer look at your savings strategy. If you’ve been budgeting properly, more money should translate into higher monthly savings. Consider both your emergency fund and retirement savings. The more you save today, the more money you will have available when you need it most.
5. Do something fun. A raise is a reflection of your hard work and dedication, and deserves to be celebrated. Depending on the size of you wage increase, you may want to go out to dinner with family and friends, or plan a family vacation. Just remember to consider your budget, and make sure that whatever celebration you choose is in line with your financial goals and priorities.
If you find your debt is so deep that no amount of raise is going to help you out of the hole, it’s time for a financial lifeline! Give us a call today to speak to a trained credit counsellor and find out how you can get your budget under control. You can also try our Free Debt Analysis online and a counsellor will reach out to you.