A pay rise creates a brief and valuable window: the new income has not yet acquired a full set of new obligations. Once the larger amount becomes ordinary, it is much harder to recover. The goal is not to hide the increase from yourself. It is to decide, before habit decides, what part improves today and what part expands tomorrow’s choices.

Directing every extra dollar to the future can make progress feel joyless; absorbing every dollar into lifestyle can leave the financial position unchanged. A deliberate split avoids that false choice. Depending on your priorities, one part might improve weekly breathing room, one might fund something you care about and one might reduce debt, build savings or increase a long-term contribution. The percentages matter less than making the decision while the money is still available.

Give the increase more than one purpose

Use take-home pay rather than the headline salary increase, and check what else changes with income. Tax, childcare arrangements, benefits, study-loan repayments or salary-packaging outcomes may affect the amount that reaches the bank. If the increase comes from a bonus or irregular overtime, avoid building permanent monthly commitments around income that may not recur. A temporary increase can still do permanent good when it is directed to a clear one-off purpose.

A pay rise is also a useful moment to review arrangements that were based on the old income. Insurance, debt repayments, super contributions and household cost-sharing may all deserve attention. In couples, discuss whether the increase changes joint contributions or remains partly available to the person whose role and work produced it. Silence can allow a welcome change to create a new fairness problem. Make the household decision explicit while the increase is still new.

One simple approach is to decide on the split before the pay rise arrives. You might direct part to a current enjoyment, part to a near-term goal and part to debt, super or investing. The percentages do not need to match anyone else’s. What matters is that the increase improves both today’s life and tomorrow’s options. Revisit the split after a few months, once you can see how the new take-home pay actually feels.

From 1 July 2026, the Australian resident tax rate on taxable income from $18,201 to $45,000 is 15 per cent, so a pay rise and take-home rise are not identical.
Source: Australian Taxation Office – Individual income tax rates

Decide the split before the first higher pay

Estimate the additional take-home amount and assign it across now, soon and later. Automate the future portion immediately, allow yourself to enjoy the chosen current portion, and review the split after three months of actual payslips.

Enjoy the pay rise, but let part of it buy something even more valuable: future choice.

–  Hannah Hines

2026