There are many companies who don’t or can’t afford to offer a bonus to their employees. It’s an unfortunate reality but in today’s economy many companies simply don’t have the additional money to splurge on Christmas bonuses. So, if you are lucky enough to be employed by a company that can reward your hard work with cash then you’re in the pound seat and you should use that to your advantage. Meaning, you should use your extra money wisely. In a way that will make it last and add value to your life.
It’s easy to sink into a mindset that you have worked really hard this year and so therefore whatever bonus you get you should be allowed to spend it on spoils and entertainment for you and your family. And this won’t be a waste because you’re all likely to thoroughly enjoy a fancy holiday or brand new stuff like gizmos and gadgets and so on. However, this money could create a better quality of life should you put it to good use.
Here’s how you should make use of the extra money you receive.
Make improvements or shift longstanding debt
By making some home improvements you increase the value of your property. This is worthwhile as when you look to sell in the future you’ll want to get the best possible value for your property and hopefully make a hefty profit. What’s more, the small home improvements you make will give you joy and keep your house maintained. These improvements can be small but impactful. Consider, security systems, revamping your pool, building an indoor braai or give your home a fresh lick of paint. And, of course, you can push the bonus into your bond and chip away at that longstanding debt a little quicker.
If you don‘t own a property then consider your car. While it is a depreciating asset, it’s eating into your expendable income every month. Lowering your repayments or shortening the period of time it’ll take for you to repay the vehicle is a smart thing to do.
Consider your retirement annuity
Read up on any financial advice and you will find yourself reading all about retirement annuities. They’re imperative to have if you hope to have a comfortable retirement. What’s more, retirement annuities are taxable so your annual rebate will see you getting tax back for having invested your money so wisely and you’re likely to receive a bonus from the tax man for this type of injection of money. Because a retirement annuity is akin to a long term interest bearing savings account you could start it off with a lump sum.Your bonus could be a hefty sum of money to start off with, this will go a long way to begin your retirement fund. Also, a retirement annuity can be cashed out if you end up needing the money urgently – there might be a penalty involved but it is available should you require it. However, the idea behind a retirement annuity is that it is there for when you can no longer continue working.
Get rid of bad debt
There is such a thing as good debt vs. bad debt. Bad debt is considered the likes of retail accounts, credit cards and things that have high interest rates. It’s bad but most of us have been there. We’ve bought what we wanted rather than denied ourselves and we’ve gone ahead with the purchase on credit. These store accounts and credit cards charge an incredibly high interest rate and can take ages to pay off, all the while these retail stores are pocketing additional money from you to cover the interest rate. It is a really good idea to pay off this lingering debt with your bonus but if you do this then cut up the cards as soon as it’s paid.
Start an emergency fund
An emergency fund is something smart people do. Be smart and start one with your bonus. This will cover you when emergency strikes. Emergencies can include car issues, medical emergencies, losing your job and any other unforeseen expenses. Emergency funds should ultimately cover at last six months of your salary, in this way you have your own salary insurance and if anything untoward were to happen you’d be able to pay your way for at least half a year. Sound good? Get a head start then by investing your bonus into an interest bearing savings account.
Bonuses could be fun and could offer you a couple of amazing adventures if you splurge but these won’t help you at all in the long run .