Where your pay rise actually goes

Think back to your first proper job. You probably thought that if you earned a few hundred more a month, you'd be sorted.

Then you got the few hundred more. And you're still checking your balance before the big shop.

Lifestyle creep

Every pay rise arrives with invisible upgrades attached. A nicer phone contract. Takeaway twice a week instead of once. A car that's slightly newer than it needs to be. None of them feels like much on its own. Together they eat the rise, and your spending ends up exactly as tight as before, just at a higher number.

It happens at almost every income, because spending rises to meet earnings unless something stops it.

The half-and-half rule

The fix I like is boring, which is why it works. Next time your income goes up, decide in advance where it goes:

• Half of the increase goes to future-you: savings, paying off debt, or investing.
• Half goes to present-you. Enjoy it. You earned it.

Set this up before the first bigger payslip lands, with a standing order on payday. Money you never see in your current account is money you don't miss.

Tell your money where to go

If you don't give your money a job, it finds one for itself. The simplest version I know uses three accounts:

1. Bills: rent, phone, travel, the boring fixed stuff.
2. Spending: food, going out, everything else.
3. Saving: moved out on payday, before you've spent a penny.

You don't need a spreadsheet with forty categories. You need to stop money leaking out of a single pot without you noticing.

One last thing: none of this is financial advice for your situation. It's how I think about money. If you've got debt that keeps you up at night, free services like StepChange (UK) will look at your situation properly.