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7 Smart Tips to Help You Make the Most of Your Year-End Bonus

By HERWriter
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These 7 Smart Tips Can Help Make the Most of Your Year-End Bonus diego cervo/Fotolia

You worked hard all year long and your company rewarded you with a bonus. Congratulations! Your first instinct may be to rush out and spend the whole thing on that big-ticket item you’ve been craving.

But before you do, consider these smart ideas to use your bonus money to meet both short- and long-term goals.

1) Create an emergency fund

Experts say every adult should have an emergency fund, which typically means cash sitting in a savings account. Your fund should have enough money saved to pay your living expenses for six months while you search for a new job.

You can also use the fund to pay for unexpected expenses like a major car repair or refrigerator failure. Remember — don’t spend the money unless it’s a real emergency.

2) Pay down debt

Paying bills is never a fun way to spend money, but think about how much less pressure you will feel when your high-interest credit card bill isn’t gobbling up your monthly paycheck.

According to Wisebread.com, if you only pay your $50 minimum monthly payment, it can literally take over 15 years to pay off a balance of about $2400 with a rate of 12.24 percent. And that’s assuming you don’t charge anything else on the card — ever!

3) Save toward a goal

Whether you are hoping to buy a new car, take a trip or pay for college for yourself or your kids, you’ll always be ahead in the game if you have the money in the bank before you make the purchase.

So concentrate on your long-term plan and visit some travel websites to build excitement while your bonus check earns interest toward your future good times.

4) Get the most from your bank

This tip can piggyback on top of idea number three. Depending on your bank and how much you are able to save, you might be able to get a better interest rate on your savings because of your growing bank balance.

Talk to your banker and shop around to different banks to find the best savings account for you.

5) Save for retirement

Even if retirement seems so far away it could be another lifetime, you will be smart to max out your retirement contributions now. If you have a 401(k) or a traditional IRA, you may be able to defer paying taxes on the part of your bonus that you put into a retirement account.

If your employer matches your retirement contributions, you can even double that part of your bonus.

6) Do better with your mortgage

If your mortgage rate is higher than current offerings, or if the type of mortgage you have isn’t the best choice for the long term, making a change could have a significant financial impact. Your bonus cash may allow you to refinance your loan for a lower rate, which can make a big difference in your monthly budget by lowering your payments.

Making an extra payment toward your principal can also help reduce the interest you’ll pay over the long run and help you get to the end of the mortgage more quickly.

7) Have some fun!

The point of being smart with your money isn’t to deprive you of the things you want. It’s to make sure your monthly budget isn’t eating you alive so you can always have some fun-money to enjoy.

So go ahead and give yourself a set amount from your bonus to spend in cash on whatever you want. But remember — just like the bonus, this treat is a one-time deal!

Your bonus is a reward for your hard work all year. Deciding what your priorities are and setting appropriate goals before your start spending that extra money will help stretch your bonus into financial gains that you can enjoy for years to come.

Next, check out these tips for what NOT to do with your year-end bonus.


RealSimple. 6 Smart Ways to Use Your Year-End Bonus. Web. December 9, 2015.

WiseBread. 6 Smart Things to Do With Your Bonus. Damian Davila. Web. December 9, 2015.

Fox Business. 5 Smart Ways to Use Your Bonus. AJ Smith. Web. December 9, 2015.

Reviewed December 10, 2015
by Michele Blacksberg RN
Edited by Jody Smith

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We value and respect our HERWriters' experiences, but everyone is different. Many of our writers are speaking from personal experience, and what's worked for them may not work for you. Their articles are not a substitute for medical advice, although we hope you can gain knowledge from their insight.

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