6 Smart Money Decisions to Take If You Got Payrise This Year

Greetings, and welcome to the 3rd edition of the Wallet Wellness Newsletter in 2026 - your midweek source of practical financial tips to elevate your money management skills!

We hope you got a chance to read the last edition, where we discussed why money anxiety happens and how to fix it. This week, we shift gears to 6 smart money decisions to take if your income increased this year.

As always, be sure to check out the Concept Corner below for a deep dive into the money concept of the week.

Let’s dive in!

MONEY254 TIP OF THE WEEK

6 Smart Money Decisions to Take If You Got Payrise This Year

Getting a pay rise or a new source of income is one of the most rewarding moments in your financial journey. However, it is also a danger zone. Without a plan, that extra money tends to evaporate into what we call lifestyle creep—where your spending rises to match your new income, leaving you exactly where you started: waiting for the next paycheck.

To turn this temporary boost into permanent wealth, here are six smart money decisions to make when your income increases.

1. Automate the "Invisible Raise"

The most effective way to manage more money is to pretend you don't have it. Before you get used to a higher standard of living, set up an automatic standing order or a scheduled transfer. If your income increased by Ksh10,000, arrange for that exact amount to be moved to a separate investment account the same day your salary lands. By making the raise "invisible" to your daily spending account, you build wealth without feeling any sense of sacrifice.

2. Deal With the High-Interest Leaks

Increased income is the ultimate weapon against debt. Before looking at new things to buy, look at what you already owe. Prioritise clearing high-interest debt, such as mobile loans, credit cards, or salary advances. These are "money leaks" that drain your wealth daily through interest. Using your raise to aggressively pay down the principal of these loans doesn't just clear your debt faster—it "gives you another raise" in the future by lowering your monthly interest expenses.

3. Build Your Emergency Fund

A higher income usually comes with higher responsibilities, which means you need a bigger safety net. Use a portion of your new income to top up your Emergency Fund. A healthy fund should cover 3 to 6 months of your new expenses. Having this cash in an accessible but separate account (like a Money Market Fund) ensures that a sudden car repair or medical bill doesn't force you back into debt. In money wellness, cash is the best cure for anxiety.

4. Maximise Your Sacco and Pension Contributions

Your "future self" deserves a raise, too. Increasing your monthly Sacco deposits is a double win: you earn better annual dividends and increase your borrowing power for long-term assets like land or a home. Additionally, check your pension or retirement scheme contributions. In Kenya, pension contributions are tax-deductible up to certain limits. By increasing your voluntary contributions, you are essentially taking money that would have gone to the taxman and putting it into your own pocket for the future.

5. Create Sinking Funds for Major Expenses

Money stress in Kenya often comes from large, predictable expenses that hit all at once—think school fees, annual insurance premiums, or rent renewals. Use your increased income to start Sinking Funds. If you know you need Ksh 120,000 for school fees next year, start saving Ksh 10,000 a month now. Spreading the cost over 12 months makes these "big hits" feel like minor inconveniences. This is the secret to staying calm when everyone else is panicking about "Njaanuary."

6. Invest in Yourself

The best asset you own is your ability to earn an income. One of the smartest ways to spend a raise is to reinvest a small portion of it back into yourself. Whether it’s a professional certification, a short course in a high-demand skill, or even books that improve your financial literacy, "sharpening the saw" ensures that your income continues to grow. A raise shouldn't just be a reward for past work; it should be the fuel for your next level of growth.

Decision Fatigue

Decision fatigue is the tendency to make poorer financial choices after making too many decisions, even small ones, throughout the day. It happens when people are mentally exhausted from constant choices—like what to buy, which bills to pay, or which investments to prioritise—and start defaulting to easy or familiar options. In personal finance, decision fatigue can lead to overspending, delaying savings, ignoring investment opportunities, or sticking with underperforming accounts simply because choosing differently feels like too much work. Read more.

Money Tips & Career Advice

MONEY254 #MONEYTOK

How Your Net Pay Will Reduce Under the New NSSF Rates

Some salaried Kenyans may see a slight drop in take-home pay starting February 2026, due to new NSSF contribution rates.

These changes are part of the phased rollout of the NSSF Act 2013, designed to increase retirement savings over time.

Lower-income earners won’t be affected, but employees earning over Ksh75,000 may notice a reduction of Ksh126–Ksh1,500 per month. In this video, we break down how each income group is impacted.

That's it for this edition of Wallet Wellness. We hope these financial tips have added some energy to your hustle. Stay tuned for more practical insights in our next edition of "Wallet Wellness" next week, and watch out for Money Weekly in your inbox this Friday.

Also, don’t forget to download the Money254 App on the Google Play Store, and remember that we can help you compare over 300 loans, savings accounts, current accounts, and more if you’re thinking about your next product.

Cheers to your wallet's well-being!

Money254 editorial team.