Have you checked your bank account today? Did you receive the annual holiday bonus?
If yes, consider yourself lucky! Why so? For this reason, only some companies dole out holiday bonuses.
The holiday bonus is the additional money that you received during the year-end season. Usually, the amount of the compensation itself is a certain percentage of your annual salary.
Although, some companies may add a bonus depending on your performance for the year. So, the amount of the year-end compensation can vary for each employee.
When the bonus is in your hands, you may be tempted by the endless possibilities to splurge all your money.
However, before you go on the shopping spree or book a flight for your short gateway, Let’s take some time to consider how you want to use it.
Making some smart moves with that funds now could further your financial future. It doesn’t mean you can´t enjoy yourself with the bonus.
Set aside a portion of the cash for a much-deserved splurge, then consider these smart ways to make the most of your holiday bonus.
Save And Invest
Do not let your bonus drain again this year! It may be tempting to treat yourself with this extra cash.
However, the most valuable treat that you can give yourself is putting some of the bonus into savings and investments.
You can save or invest as much as you like to maximize long-term wealth. Do your research or speak with a financial advisor to determine the right choice for your financial planning.
There are most common types of investment you can try, such as:
- Mutual Funds
- Retirement Plans
- Cryptocurrencies, etc.
By doing this, you can see your money work for you, and it is like you have created another income stream!
Nonetheless, it’s important to note that every investment comes with risk.
If you are still unsure about the investments we mentioned earlier, you can save on year-end bonuses by saving traditionally. No, we won’t tell you to put money in a piggy bank.
You can save and keep the bonus in your current savings account and get 1% of the total annually.
Moreover, you can open a new one or separate the savings account for short-term needs. Thus, that extra cash is the starting point toward your financial goals.
You have worked so hard to get the bonus. Now make the bonus work for you.
Pay Off Your Debts
Clearing off your debts must become your priority before getting distracted by unnecessary expenses during this happy season.
You can be grateful if your holiday bonus is sufficient enough to cover some or all of your debt. You can utilize these extra funds to reduce your debt, whether it’s on credit cards, student loans, or your car.
These debts come with high interest and can cost you a penalty charge. Therefore paying them off now can prevent the interest and charges from increasing.
Being debt-free means you´re not worried about interest and other finance charges slowly draining your savings.
The less you owe, the better you will be at reaching your financial goals.
Set Up An Emergency Fund
Another wise way to use the holiday bones is to put them into your emergency fund. An emergency fund is a key element of a healthy financial life.
If you don’t have one, setting one up is a smart step to take. An emergency fund should be three to six months’ worth of expenses.
However, everyone’s financial situation is different. Hence, be sure to evaluate what the best amount is for you.
If you’ve used your emergency fund, now’s the time to replenish it.
An emergency fund is helpful when you lose a job. It can also see a sudden reduction in pay or you’re hospitalized for a medical condition. It includes are in case of an emergency.
Invest In Yourself
Spending your end-of-year bonus on self-improvement is a wise choice. It could be heading back to some courses or getting a certification.
Check with a local community college if it offers any continuing education courses that will provide you with skills to help advance your career.
By investing in a job-related skill, you can improve your earning potential, too. You can also purchase books that can help you professionally and personally.
Whatever it is, investing in yourself will pay off in the short and long term.
Your year-end bonus should be a reason to celebrate. For this reason, you have worked very hard throughout the year to earn the bonus.
After setting aside a portion for savings, and debt payments, don´t forget to treat yourself with the remainder.
Spending on experiences will bring more joy than buying things. It could be a nice dinner, a spa day, or going to the new place you’ve been dreaming of.
In a nutshell, receiving a holiday bonus may be a surprise.
You may be tempted to splurge and treat yourself. However, this is not necessarily the wisest way to manage your bonus.
Instead of splurging, look into more financially sound ways to use it. You can save and invest, pay off your debts, set up an emergency fund, and invest in yourself.
When your bonus pay comes this year, take a minute or two to think about how you intend to use it.