5 Reasons Why a 10%-20% Increase of our Salary is not really an Increase

We rejoice every time our company declares an increase in our salary. What difference does it make in our lives when:

1. The rate of inflation is more consistent than the rate of our salary increase
2. We buy additional liabilities – liabilities are things that take away money from our pocket (e.g. new cell phones, laptop, expensive clothes, new car, new house, etc..)
3. We apply for additional loans
4. We upgrade our lifestyle more than what our salary can pay for
5. We celebrate and go gimmick more often

Salary increase never really makes a huge difference because if it does, we will never do the following:

>>Put our money into cooperatives hoping for an extra income. But end up tightening up our budget because of the obligation to contribute to the cooperative. Then earn how much? 6%? 10%?
>>Invest into stocks and mutual funds hoping that the stock market will go up. But end up hoping because we don’t have control.
>>Cost-cutting, which most of us really don’t like.

What we thought could give us the solution was actually giving us more money and headaches. So how do we solve this reoccurring problem? Since we know that our salary increase is in direct proportion to the increase of prices/expenses. It’s never TRULY an increase.

Our best bet is financial education. Because if we’re financially educated, we know that we can’t rely on our salary increase to have extra. But instead, we will look on other options that are practical and efficient to give us our desired additional income. And the best way to increase our Financial IQ is by having a team or community. If we do, we could eliminate the worries of lack of knowledge about businesses and investments.