You Just Got Your Federal Pay Raise: Now What?

Following President Trump’s executive order confirming federal employee pay raises, the average employee will receive a 3.1% pay raise. Now, we all know what often happens when we get a raise. The first few paychecks are really exciting and the extra pay feels like a nice bump. Then, we adjust to the higher amount by expanding our spending and after a couple of months we don’t even remember getting a pay raise. Now, it doesn’t have to be this way. A pay raise is a great time to up our savings without even feeling it. It can be as easy as contributing your raise to your TSP every pay period. Once you set it up, you don’t even have to think about it. On top of that, you don’t even have to spend less because you were already used to the amount you were receiving every two weeks. This may seem like a small change but it can make a big difference come retirement. Let’s say you make $80,000 a year and with a 3% raise you’d make $82,400. If you took the extra $200 a month and invested it in your TSP. Over the course of your career (let’s say 20 years with a 8% return) that one change would add over 100k to your TSP balance. Now think what would happen if you put more of your pay raises in the TSP? The effects are powerful. Now answer this question. When is the best time to contribute more to your TSP? Answer: 20 Years ago. Second Best Answer: Right Now. Don’t let what you’ve done or didn’t do get you down. Start investing more today to make tomorrow incredible.