In the last decade many people were ultimately hurt because the consumer price index which measures inflation on consumer staples goods, increased at a much faster rate than wages did. This seems to be changing a bit now, but I want to bring across and idea that I like to call creating your own pay raises. This idea is also great for an emergency fund idea if you dont have a typical type of income (however I would suggest cash for an emergency fund mostly). Instead of waiting for your employer to raise your salary, you can do it yourself. 

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The idea here is that you want to contribute more than what the maximum is for your IRA or pension. An increasing amount of people dont have a pension or 401k options these days, so this might be for you, especially if you run your own business. There are many ways you can give yourself a pay raise because there are many ways that you can use your money and invest wisely but ill give an example of a few ideas that I like. 

First these methods are usually after you cap out your IRA contributions, which is roughly $5500. Dont stop putting away money just because you maxed out your IRA, start contributing to a basic retirement account. Another option entirely is to just use the extra money to pay off debts because that will lower your expenses as well. If you can keep your expenses low and save more, you can invest in value stocks that pay decent dividends but also have good growth potential. You dont have to reinvest the dividends, you can use them as a raise you give yourself. 


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Dont touch the IRA dividends though, those dividends are more valuable because of tax implications but on a regular brokerage account, you can take the dividends if you have enough money set away. There is also the 1% or 2% rules you can use which is basically the idea that you take 1% or 2% of your brokerage account each year and use it as a pay raise. With 1% you will most likely never actually run out of money and your principal will grow much more than that each year and with 2% its a bit higher, but you will usually have the same results.

If you are saving for retirement and catching up due to lost time, these are not recommended at all. You are going to want to have as much as you can, but if you start young and live with little expense, you have the benefit of having more than you need for retirement. The key is time, if you have more time the more options and more creative you can get in how you manage your money. The other option is mastering a hobby that you can use to make you money, whether that is teaching or tutoring people about it or if the hobby itself produces goods. There are a ton of options out there you might just have to be a bit creative.

-Calaber24p