Spending The Bonus- Wisely
Some people get bonuses regularly, others get a bonus once in a blue moon. Irregardless of the frequency, most people would have a pretty good idea on how they would spend one should it come their way. Here are some tips on spending (or saving) yours wisely.
Reason To Spend
To an extent (though not always) we find it hard to spend hard-earned money on frivolity. An unexpected windfall, such as a bonus, doesn’t have the same sense of responsibility attached to it. We haven’t earnt it, dollar by dollar, so we feel like we have less restriction in spending it all, right away. Compounding this is how close to the line we all live- if we’re budgeting, we have little room for disposable income and if we’re not budgeting, we’re generally out of money by the end of the month anyway. And there are so many things we need to spend money on. So why not spend it?
And Yet… Rainy Day Territory
Putting the extra money into savings might seem like insanity. It’s an extra, a saving you haven’t budgeted for, so why not use it? The thing is that- after months of thought for most purchases- a bonus is likely to be spent quickly and without much decision-making rationale. So how can you mitigate this? Why not leave the money in your savings account for a set period of time- say a month, or six months. Don’t plan to save it forever, just to keep for a period of time until you are clear on what most urgently could do with an injection of extra money. It might end up being your savings you decide upon. Whatever the outcome, at least you’ve protected yourself against unthinkingly frittering away the money.
Spending Sensibly
A bonus can be spent in a way that is a great financial decision. For instance, I’m always positive about paying down debt. I find it hard to see the negative in that- as long as paying down debt doesn’t just clear a space for us to spend extra on the credit card. If you’ve already been saving for something- a trip, a renovation- and the bonus is the extra money you needed, I say hurrah.
Create An Emergency Fund
If you don’t have one, your bonus may be about to become it. You should keep adding to it until you’ve saved three months of wages, but a bonus can be the kickstart you needed. An emergency fund is always a sound financial decision, and a necessity for the financially stable.
Invest
Some experts suggest spending your bonus on something that might one day make a return. They suggest if you have an emergency fund, good debt repayment and a strong retirement plan, why not think about using your bonus to invest? It’s an amount you can afford to lose, and could be a great way to start being involved in the stock market. Do your research thoroughly and get some advice from family and financial advisors. Your bonus could also be the means to rebalance your portfolio- if it is currently tending towards too little or too much risk, you can use the money to even everything out a little.
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