Welcome to The Money Coach, a Times of Malta column where readers can ask questions about life's money issues. Send your questions about personal finances, inheritance, gifting or other personal finance topics to moneycoach@timesofmalta.com. 

Dear Luca,

My marriage is solid, I've recently switched jobs and got a significant pay raise from €42,000 to €60,000, and my husband has been promoted with a slight salary increase.

Even though everything in my life seems to be on the right track, something's off. Despite these positive changes, I don't feel my life has improved. Previously, on a €42,000 salary, I could save around 10% and not feel financial pressure. But since the job switch a few months back, I've encountered my first bout of credit card debt and can't save a cent.

I'm puzzled about where things went wrong. Sure, I've splurged a bit more on clothes, handbags (which I adore), and the latest Apple gadgets (big fan here), but those purchases alone don't seem to justify my debt.

It's been tough to reach out for advice; I'm embarrassed and fear judgment or mockery. This adds to my anxiety and confusion. I'm terrified this situation might strain my relationship with my husband, especially since I haven't shared this with him. I feel guilty that he saves more despite earning less.

This might sound bizarre or trivial to you, but I feel isolated with these issues. It's like no one can relate or offer the support I need—not a therapist, counsellor, or banker, but someone who gets it.

Confused and Worried

Luca responds:

You'd be surprised by how common your situation is. Many people struggle to manage their finances after a significant salary increase, just as you have.

A big salary jump can sometimes make it tough to control spending if you don't have a strategy in place. I prefer to use the term "Forecast Spending Plan" instead of budgeting. The idea is to plan your spending in a way that doesn't feel restrictive, because we work to enjoy life both now and in the future. In such a plan, I include a "Happy Money Fund" for spending on personal interests and hobbies each month.

To address your immediate concerns, a Forecast Spending Plan allows you to anticipate your monthly expenses, including:

  • Loans
  • Bills account (covering everything from utilities to car insurance and subscriptions)
  • Groceries
  • Entertainment
  • Savings and Investing

Add your total income to this plan. It'll help you see where your money is going. You might also consider using financial tracking tools, like those offered by Revolut, for better insight into your spending.

This plan isn't about imposing limits; it's about making informed choices.

Beyond practical steps, many of my clients experience what's called "lifestyle creep" after a job change or coming into money. This often ties back to the psychology of money, an aspect many overlook.

Regularly reflect on your financial goals and how you're working toward them. Using your salary increase effectively to meet these goals is crucial, and losing sight of them is a common pitfall.

Understanding the 'why' behind your financial decisions can profoundly impact your relationship with money and help prevent future stress.

Luca is the founder of the Money Coaching Hub. Email him your financial questions at moneycoach@timesofmalta.com

Disclaimer: This column is intended to provide general information on various topics related to personal finance. The information provided is for educational purposes only and should not be construed as personalised financial advice for your specific situation. Financial decisions are highly individual and can vary greatly based on your unique circumstances, goals, and risk tolerance. The author of this column is not authorised to provide financial advice. Before making any financial decisions, it is recommended to seek professional financial advice from an authorised financial advisor.

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