Wouldn’t it be nice to have the power to give yourself a raise? A raise could allow you to increase how much you are saving a month for a down payment on a house. A raise could increase the amount you save for your kids college fund. Maybe you need a raise just to give yourself a little more cushion each month. I think it’s safe to say no one would turn down a raise regardless of their financial situation, right?

First of all, what is a raise? You probably think of a raise in the traditional sense. Where your employer increases your salary or hourly rate. Sure this is a great kind of raise but might not happen as often as you’d like. This kind of raise is ultimately in the hands of someone else. But that is not the only kind of raise. I look at a raise as anything that increases the amount you have left over after your expenses each month. This kind of raise can be obtained by either increasing your income or decreasing your expenses. An even bigger raise can be obtained by doing both.

The easiest way to give yourself a raise is to find areas in your budget where you can decrease an expense. Of course this is assuming you are on a budget. If you haven’t started a budget then you can start here.

July is a perfect time of year to look at your finances and make adjustments. You have a full six months to look at, which is a good sample size. It also makes it easy to project out the rest of the year. If you’re trying to reach a financial goal by the end of the year, you can clearly see what needs to be changed in the next half of the year to get there.

First look for categories where your six months average is less than what you have budgeted. Then look for areas of wasteful spending. For example, you budgeted $300 a month for groceries but over the first six months of the year you averaged $250 per month. Then out of that $250, you estimate that there was probably at least $25 worth of groceries you didn’t need or got thrown out. Just like that your grocery budget has gone form $300 a month to $225 a month. That’s a $75 raise just by adjusting the grocery budget. That can motivate you to find other categories that can be reduced to create an even bigger raise. It is really that simple.

Now let’s focus on the income side of the equation. It starts with understanding your tax refund. A tax refund is just that… a refund. When you have too much withholding tax taken out of your paycheck each month it adds up over the course of the year and then gets refunded back to you when you file your tax return. If you are taking pretty much all the same tax deductions and credits each year, your tax withholding from your paycheck is the only variable that effects your refund. You may already know this but it is important to reiterate this so that you understand how you can give yourself a raise.

Now let’s assume your tax return is going to look similar to the previous year. Meaning your income will be pretty similar and all your deductions and credits should be right around the same. If this is the case, you can look at your tax refund from the previous year and divide it by the number of pay periods you have in a year.

For example, let’s say you got a $3,000 federal refund and you get paid twice a month or 24 times a year. By adjusting your tax withholding you could take home an extra $125 per paycheck or $250 a month. So instead of having to wait until April to get your $3,000, you can get it throughout the year. You can do the same thing for your state refund to adjust your state withholding. This is particularly helpful for people in a situation where money is tight each month. A lot of stress could be eliminated by just increasing your take home pay and decreasing your tax refund.

Keep in mind, This calculation gets more complicated if your tax return is going to look much different than the previous year. Your accountant may need to run some tax projections for you but it can be done. We do this for clients all the time.

Make it your goal this month to take a good hard look at your finances. Find areas where you can decrease your expenses and adjust your withholding at work to increase your income. Give yourself a much deserved raise.