Are you getting a little something extra in your paycheck this year? If you’re anticipating a year-end holiday bonus take a second to congratulate yourself, you’ve worked hard for this. With the ever-changing economy and tight budgets, any extra funds can come in super handy. This fact makes it even more important to spend your bonus wisely so you can get the most bang for your buck. Below are seven ways to get the most out of a year-end holiday bonus.
Source: Money - US News
Don’t start racking up credit card debt in anticipation of receiving your holiday bonus. You may have been given the same amount in years past but that doesn’t mean your employer will payout the same this year. Don’t get stuck with a major cash flow issue by spending your money before it clears your bank account. Wait until you actually receive the holiday bonus before making plans to spend it.
When your bonus officially arrives don’t let it sit in your general checking account too long. Unless you already have an exact plan for how you’re going to spend the funds, it’s much too easy for it to get absorbed into paying bills or blown on impulse purchases. Transfer the funds into a separate savings account until you’re ready to spend it.
You work hard for your money so go ahead and splurge a little. Set aside part of the holiday bonus to treat yourself to something you’ve been eyeing for awhile. Indulge in a much-needed massage or splurge on an expensive pair of shoes. As long as it’s done within limits it’s okay to reward yourself with some short-term satisfaction.
Credit cards and personal loans often come with very high interest rates. Because of this it’s usually a good idea to use a generous portion of any bonus to pay down these debts. The Federal Reserve recently reported that interest rates on outstanding credit card balances have reached upwards of 13.22% which is the highest number since 2010. But paying down these high-interest debts will allow you to keep more of your hard-earned money.
Thinking of purchasing a new car next year? Want to go on a family vacation? Now’s the time to start thinking ahead and use part of your bonus to jump start any new savings goals. Stash away some extra money in anticipation of large purchases, such as a new washer or dryer or dental work you may need. Look ahead to next year and set aside funds to help ease the stress of any large expenditures.
Source: The Global Trend
You can never go wrong with investing in your future. Your retirement years will be here before you know it and socking away a little extra money now will go a long way. Take a portion of your holiday bonus and invest it into your 401k or IRA. If your employer offers a 401k match that’s like getting free money. Plus, the younger you are the more you’ll be able to take advantage of compound interest on this amount.
Source: Money - US News
Instead of blowing your entire holiday bonus on gifts for others, spread the cheer by donating a portion of it to your favorite charity. Not only will you receive a tax deduction on next year’s tax return but you’ll be able to pay it forward to a deserving charity. Not everyone may be as fortnuate as you are this year so think about ways to help them have a good holiday season too.
There are many smart ways to spend your year-end holiday bonus and these are just a few. Do your best to allocate the funds in ways that will benefit you now and in the future. Paying off debt and saving for retirement are extremely important financial moves to make, but don’t forget to splurge a little on yourself too. You deserve a reward for all the hard work you’ve done this year!