You just received a 2%-3% pay increase. Now what? You could take an active role by putting this money to good use.  Here are some tips you can use to get that increase working for you.

1. Pay off your high interest debt- You are use to living off your current pay, so when you get an increase it would be wise to pay off debt. Having credit cards with high interest rates means your going to be paying for a while. If you paid off a few of these cards you can consider this another pay increase with the funds you free up.
2. Start building your emergency fund- Many people do not have an emergency fund in place. Experts recommend that you have three to six months of living expenses set aside in your emergency fund. Living on your previous pay and saving your new pay increase is a great start to building your emergency fund.
3. Increase your retirement savings- By using that pay increase to build up your retirement fund should be a priority. April 15th of each year is the final day you have to contribute to an IRA. Use that year-end bonus or pay raise towards your retirement so you can maximize your contributions by April 15th.
4. Double check your insurance protection- Your family and assets have grown so should your protection. Do you have umbrella coverage to protect against being sued. What about flood insurance according to FEMA 30% of flooded homes were not insured. If you live outside a flood zone coverage is inexpensive.
5. Splurge on yourself- You did earn the money and you should enjoy it. Take a small portion such as 10% and spend it on something for yourself or family. This is like a cheat day for diets. Do not be too strict with how you spend the money you will be more inclined to fall off the wagon.