6 Ways To Make Use Of Your Bonus

 

Photo by Frugal Flyer on Unsplash


Generally you can get a bonus when working for a company. This bonus can be earned either end of year or any other time in the year depending on the start date and end date of your company’s fiscal year.

As someone who has put in your hard work, sweat, and time, one would be excited to receive it. However, what do you do with it when you get it?

Receiving a bonus from work can be an exciting financial windfall. It’s an excellent opportunity to get ahead with your finances and set yourself up for future success. If you’ve received a bonus, it’s important to use it wisely. As my reader especially, I hope you can make use of your bonus wisely. Afterall, my purpose of writing articles is to help and guide you to be better. ;)

So, here are 6 ways to make use of your bonus:

  1. Pay off high-interest debt

  2. Build up emergency fund

  3. Save ahead

  4. Invest in your future

  5. Invest in yourself

  6. Home improvement


Let’s get started!


1. Pay Off High-Interest Debt

One of the best ways to use your bonus is to pay off high-interest debt such as credit card debt or personal loans. Not only will this help you save money on interest payments, but it will also improve your credit score and provide a sense of financial freedom.


Credit card loans can have high interest rates. If you neglect it, it can snowball and bankrupt you in the worst case scenario. The same thing goes for some of the personal loans like car loan, renovation loan, etc. Therefore, if you have big money, it is best to use a bigger portion to pay down the capital instead of just the interest. That way, you can be free of loan quicker and start planning for your future without any stress.



2. Build Up Emergency Fund

Unexpected expenses can arise at any time, so having an emergency fund is crucial.


As much as your hospital bills and other bills that can be covered by insurance will be covered, emergency funds are crucial in scenarios where you cannot be covered by insurance protection like retrenchment.


When retrenchment happens, it could take up to months, if not years, to find a new job. During this period, you don’t have income other than your own savings. The longer it takes, the more you might need to save. It also depends on your lifestyle. The more luxurious your lifestyle is, the more cash you need.


Experts recommend that you have at least three to six months’ worth of living expenses saved up. If you don’t have an emergency fund, use your bonus to start one. If you already have an emergency fund, consider adding to it.



3. Save Ahead

Use a portion of your bonus as “savings” for your goals that are probably near term, but big ticket items like wedding, or buying a house.

Plan ahead and use this to boost the savings for the budget needed. Put this in low risk assets that can at least give you more return than a bank rate. However, bear in mind the ability to withdraw it fully without penalties. It is because this money is supposed to be used for your necessities even though they are not so near term.

Don’t be a fool that put the money in something that locks it up and passes the event when you need it.


4. Invest In Your Future

Using your bonus to invest in your future is a smart move. You can use your bonus to contribute to your retirement account to help secure your financial future. Contributing to your retirement account can help you reach your financial goals faster and provide a comfortable retirement.

This can be done by considering increasing your 401(k) or IRA contributions (for US) and CPF (for Singapore).

Another way of investing in your future is through investing. Doing investing can help to grow your wealth as well as hedge against inflation. Another function of this is to have passive income for yourself when you are older. This can help by providing regular income through dividends.

However, for this to work, you need to start now, especially when you are still young. For you to be able to enjoy your future, you need to put in the work now. Start early and your future self will thank your past self.


5. Invest In Yourself

Take advantage of your bonus to invest in yourself. Consider enrolling in a professional course or certification program, or even pursuing a personal interest like learning a new language or taking up a hobby that could potentially turn into a side business.

Afterall, by upgrading yourself, you will be open to potentially better opportunities that will help to upgrade your pay and subsequently your quality of life. Investing in yourself is one of the best moves out there.


6. Home Improvement

If you own a home, using your bonus to make improvements or repairs can increase the value of your property and enhance your living space. For example, you can invest in a new kitchen or bathroom renovation. This can also help you save money on your energy bills by upgrading your home’s energy efficiency.

Another way is to maybe focus on repairing your old house, especially the core foundations, pipes, or wiring that can help to improve the quality of your house for the long term. This can potentially help to improve the value of your house as well as the quality of your life too.


Bonus: Treat Yourself

While it’s important to be responsible with your finances, it’s also okay to treat yourself. Consider using a portion of your bonus to indulge in something you’ve been wanting, whether it’s a vacation, a new piece of technology, or a luxury item. This will help you feel rewarded for your hard work and keep you motivated for future success.

One caveat though, is to use your bonus for something more necessary or important first, before using the money for your wants. Afterall, fixing your life is more important than YOLO-ing.


Conclusion

Receiving a bonus is an excellent opportunity to get ahead with your finances. Whether you choose to pay off debt, build an emergency fund, invest in your future, make home improvements, or treat yourself, make sure you use your bonus wisely. By doing so, you’ll set yourself up for future financial success and enjoy the rewards of your hard work.

Remember, your year-end bonus is an opportunity to improve your financial well-being and set yourself up for a better future. By making smart choices and using your bonus wisely, you can make the most of this once-a-year opportunity.

With that, thank you for reading. If you think this might be helpful to other people, feel free to share. Also, this article is by no means an advice to buy nor sell. Always do your own research. If you have any comments, feel free to comment below so that we all can learn together.

Thank you for reading.


If you plan to open up account for investing, you can use my referral to sign-up with free gifts (as of writing):

You can support me by tipping me (optional) through: Medium link

Or directly by clicking on either of these:

Ko-fi (recommended):

Get me a coffee:

Buy Me A Coffee

Comments

Post a Comment

Popular posts from this blog

Investing 101: A Beginner's Guide to Investing

Image
  Photo by Kevin Loesch on Unsplash This article is going to be about investing. As I am in the line of job where I meet a lot of people, I started to pick up how the younger millennials are starting to do their own investing with abundant information out there. On top of that, the Gen Z labels investing as cryptocurrency = super risky, but a lot of money, like 2 end of extremes. So, let’s talk about investing. Investing can be a great way to grow your wealth and achieve your financial goals, but for beginners, the world of investing can seem daunting and overwhelming. With so many investment options and strategies available, it can be hard to know where to start. In this beginner's guide to investing, we'll cover the basics of investing, including the different types of investments, how to get started, and strategies for building a successful investment portfolio.
Read more

Saving Money: Tips and Strategies for Building Your Wealth

Image
  Photo by Towfiqu barbhuiya on Unsplash It is a no-brainer that saving money is a crucial part of building wealth. It is an essential step towards achieving financial freedom and creating a secure financial future. How you do it can determine the results. However, saving money can be challenging, especially when faced with unexpected expenses or the temptation to spend money on non-essential items. This is especially true when people just think that just because you might not live tomorrow, he/she can just go YOLO and spend paycheck by paycheck every month. Conceptually speaking, the idea of “saving money is important” is easily understandable and at the same time, has many layers to it. This is why professionals like us exist. Anyway, in this article, we will explore 15 tips and strategies that I can think of for saving money and building your wealth. Let’s get started! P.S. If you want to know more about money, read The Different Stages Of Money to level up. Otherwise, if y...
Read more

How to Create a Budget and Stick to It

Image
  Photo by Sincerely Media on Unsplash Creating a budget and sticking to it is one of the most important financial habits you can develop. A budget helps you understand where your money is going and can help you make informed decisions about spending and saving. However, creating a budget is only the first step – sticking to it can be a challenge. In this article, we’ll explore some practical tips and strategies for creating a budget and sticking to it. P.S. I have preached on budgeting almost on a daily basis to the people who have consulted me or even on my articles. But, well, let’s talk about it in detail because why not.
Read more