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## Saving that Raise

**THE SCENARIO**
It's the start of the year, and many companies choose that time to give raises to their employees. If your company gives raises at a different time of year, feel free to bookmark this post and refer to it later on.
Let's say Jack got a raise of a dollar an hour - $160 per month. He's sorely tempted to get spinning rims for his car (followed by a new car to go with his spinning rims), but instead he decides to sock that money away for a future down payment on a house.
If Jack earns 10% on his money, and he invests all of this year's raise, how much will he have after 5 years? Assume that Jack keeps 60% of his income after taxes.

**THE SOLUTION**
Jack's raise is $160 per month, but he only keeps 60% of it. Therefore, Jack can invest $160 x 60% = $96 per month.
First things first, make sure the calculator is using 12 Payments per Year.
N: 60 (I want to know how much Jack will have after 5 years)
I/YR: 10 (Jack's investing his money at a 10% return)
PV: 0
PMT: -96 (Jack's investing $96 per month)
FV: (This is what I'm trying to find)

Note: You can use any financial calculator to do this problem, but if you want the BEST, you can
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After investing his raise for 5 years, Jack will have accumulated **$7,433.96**.

$7,434 might not be enough for a down payment on a house where Jack lives, but keep in mind that there's no rule saying you can't buy property somewhere else. Also, if Jack invests *next year's* raise, and the one following that, and so on, he'll actually be able to put together quite a bit more than $7,433 over the course of those 5 years. What do you think? Is saving a raise something you think you could do?

If you couldn't save your raise, could you save *half* of it? Let us know what you think in the comments!