9 Smart Ways to Spend Your Holiday Bonus
Make the most of your holiday bonus! From boosting your emergency fund to paying off debt, investing in yourself, and even splurging wisely, these tips help you enjoy your bonus while setting yourself up for financial success.
The holidays are a time of watching festive movies, spending time with loved ones, enjoying hot chocolate, and sometimes, even a holiday bonus. By following these tips, you can see how to enjoy your holiday bonus while also setting yourself up for financial success in the new year.
Boost Your Emergency Fund
The first and most important step to achieving financial freedom is to build an emergency fund. Start out by saving $1,000 in case of smaller emergencies, and then work your way up to cover 3-6 months of living expenses. If your emergency savings are low or you need to build it back up, putting your bonus towards this can give you peace of mind knowing you won’t have to use a credit card in case of unexpected costs.
Knock Out Your Debt
If you already put some Christmas décor or gifts on your credit card, now is a great time to use your bonus to pay them off. You could also put this money towards paying off your car or mortgage.
An easy way to make a plan to pay down your debt is by using the debt snowball method. This can help keep you motivated by wiping out smaller balances first and using that momentum to eventually pay off all of your debt. Plus, not only can using your bonus help you get closer to becoming debt free, but you’ll save money in interest over time. It’s a win-win!
Invest in Yourself
Investing in yourself can pay off in the long run. You could use your holiday bonus to pay for courses, certifications, or skills development that can help you advance your career and boost your earning potential in the future.
Also, if there’s a new skill or hobby you’d like to try, you could use a portion of your bonus to invest in equipment needed. For example, maybe you’ve always wanted to learn how to play guitar, start a podcast, or create an online store with crafts you want to sell. Just be sure to budget for supplies you might need for this in the future.
Plan Ahead for Tax Season
If you receive a holiday bonus, keep in mind that they will be taxed differently than regular income. Consider setting aside part of it for taxes, especially if your bonus could bump you into a higher tax bracket. You can also consider contributing to retirement accounts like an IRA.
Explore Investment Options
No matter what age, there’s no better time to start or continue investing in your future. The earlier you start investing, the more you can potentially earn over time through compound interest — you’ll thank yourself later!
You can also explore other investment opportunities, like EasyVest® to invest smaller amounts with a digital advisor or choose your own investments.
Save for a Goal
Whether you're planning for a down payment on a home, a vacation, or other big purchase, paying yourself first by saving your holiday bonus can be a great way to boost your savings without affecting your regular budget. Plus, you can earn more on the money by putting it in a high-yield savings account or a Certificate of Deposit with a premium rate.
Give Back and Live Generously
Generous living – and giving – can make an extraordinary difference in the lives of others. By making a charitable donation with your holiday bonus, you can support causes that make a difference in the community. Supporting causes that you care about not only makes a positive impact but may also lead to additional tax benefits in the following year.
Splurge Wisely
While it’s important to use your bonus responsibly, you put in the hard work to earn your bonus, so it’s okay to treat yourself some! Set aside a portion of the bonus for something you’ve been wanting but keep it within reason, so it doesn't derail your larger financial goals.
You could also use part of bonus to plan a fun activity with friends or family like going out to dinner at a restaurant you’ve been wanting to try or going to a new movie you wanted to see. That way you won’t spend part of your bonus on impulse purchases, and you’ll be making memories with friends and family along the way!
Remember, before you spend your holiday bonus all in one place, it’s important to create a plan for your money. By planning ahead and using your bonus wisely, you can make the most of your money while enjoying the extra reward for your hard work!