A combination of factors — including inflation at 7.9%, a tight labor market and the Great Resignation/Great Reshuffle giving employees more leverage in negotiations — is pushing more Americans to ask for a raise. In addition, the number of quits increased in February with 4.4 million workers voluntarily leaving their jobs, according to the Labor Department, adding further proof of employees’ dissatisfaction.
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Against this backdrop, a Laurel Road survey found that a majority of women — 54% overall and 59% of BIPOC women — are looking to make up for lost ground during the pandemic, saying they think they will ask for a raise in 2022.
However, while pay increases are common overall, they are being outpaced by inflation. Pay is a major reason why — 79% of employed job seekers believe that they can make more money by switching jobs than staying put in the current market, according to a Joblist US Jobs Market report.
However, the report notes that of the 53% of workers who received a pay raise in 2020, 58% reported that their raise was 5% or less, failing to keep pace with the 6.8% inflation rate reported in November 2021.
With this in mind, experts caution to be very mindful of where to put that extra money, whether it’s planning for retirement, paying off debt or saving for a rainy day.
Erica Seppala, financial analyst at MerchantMaverick.com, tells GOBankingRates that if you receive a raise in your salary, the way you should spend (or not spend) these extra funds really depends on a number of factors. She says to first consider your current financial situation. Are you drowning in debt? Are you struggling to pay your rent, mortgage, or other bills?
“This isn’t uncommon – layoffs, closures, days taken off due to illness, and other scenarios have put a heavy burden on households around the world. Do an honest analysis of your current situation before you decide how to spend your money, if you choose to spend it at all,” she said.
The next step is to look to the future. She recommends starting small by looking around the current state of your city or state, as inflation is hitting everyone hard, but in some areas, it’s worse than others.
“If your current paycheck is stretched to the max to pay your ordinary expenses (everything from bills to groceries to gas), there may be a need in the near future to use extra funds to cover your living expenses,” she said.
You can also look further into the future, she adds. For example, if your older car has …….