Whenever you get extra money, think about how it can help you get closer to your financial goals. This does not necessarily mean that you cannot get some of this unexpected monetary gain. But you should at least think about how part bonus money can help your financial future.
Need ideas? Here are some financial goals you can work towards and how you can use this cash bonus to get even closer.
Get out of debt
If your goal is to get out of debt, you have several obvious uses for this holiday bonus, including:
- Pay off the smallest debt. If your holiday bonus is big enough to cover one or two of your small debts, paying them out in full might be a pleasure. This option can give you good motivation to continue paying off all of your debt. Plus, it can eliminate a couple of monthly payments, which will free up more money for a bigger balance.
- Pay off your debt at the highest interest. Want to influence your ability to pay off your debts? Pay off your debt with the highest interest rate in the first place into a debt avalanche. Even if you can’t pay off the entire debt, paying off the debt at the highest interest rate will ultimately save you more money in the long run. Keep striking that balance in the new year and making great strides.
More details: How a snowball can reduce and then pay off your debt
Improving your credit rating
Even if you don’t have a lot of debt, you may have a lower credit rating than you would like. If you want to improve your credit score, do one of the following:
- Pay off your credit card balance. Since your debt to loan ratio is one of the most important components of your credit rating, paying off your credit card balance is a quick way to improve your rating. For the most significant gains, repay whichever credit card is closest to its credit limit.
- Pay your bills in advance. Paying bills on time, every time is essential for a good credit history. If you’re having trouble in this area, consider using a bonus to pay a couple of bills up front. Continue making payments on time after this point, but try to stay a month early. If you run into a difficult month or are late paying your bills, you won’t get a late payment penalty or credit score.
- Get your budget a month in advance. One of the popular You Need a Budget budgeting methods involves spending a full month in your checking account. You are constantly living on the income of the last month. Even if your holiday bonus isn’t equal to your full month’s salary, you can use it to get started with this clever budgeting method. Budgeting a month in advance makes it nearly impossible to miss a bill, so your credit score remains high.
Connected: 11 Easy Ways To Improve Your Credit Score Today
Increasing your savings
Want to boost your savings or set aside money for a specific goal? Try one of the following:
- Save something specific. Is there something you are actively saving to buy? Your holiday bonus or Christmas money can be a big addition to this fund. Whether you’re saving for a house, a new car, or a vacation, investing in something big is always a good option.
- Invest in your emergency fund. If you are actively working to get out of debt, you will still need a thousand dollars or more in a savings account. If you are out of debt or close to it, you will want to have three to six months of spending in your savings account. The worst happens just in case. Invest your money in setting up or building this fund and you can’t go wrong. Here’s an article with our tips for setting up an emergency fund.
- Open a new general savings account. If you have not been very good at saving in the past, consider opening a free savings account that you can continue to contribute to over the next year. Sometimes a little already saved can be enough motivation to even lose. more Money. Here’s our list of the best online high interest savings accounts.
Savings for retirement
If your primary financial focus is on retirement investments, try one of the following options with your bonus:
- Contribute to your IRA. Are you already a big contributor to your company’s 401 (k) plan? Use your Holiday Bonus to top up your Traditional or Roth IRA.
- Contribute to your health savings account. If you have already depleted your retirement savings, consider adding medical savings to your account (if you are eligible). Since this money can also grow indefinitely without paying taxes, it can serve as bonus retirement savings and can be especially useful if you are for several years after retirement.
- Try a taxable investment account. Want to try your hand at making investment decisions when you have more options? Consider opening a taxable investment account with a tool such as Improvement… You don’t want to put too much money into a taxable account until you exhaust your tax breaks. But a bonus can be a great start to this type of investment.
Promote your career
Do you have serious career goals? Use your holiday bonus to move towards them.
- Upgrade your home office. Do you work from home or do you often bring work home in the evenings and on weekends? Having the right workplace can help you be more productive. Consider using your bonus for your home office remodel. Don’t overdo it, but focus on the basics like the technology you need (scanner, printer, etc.) and a comfortable, ergonomic and quiet workspace.
- Take a course. Upgrading your skills and knowledge is always a great way to pursue a career. Try using your bonus to take a college course or online class designed to improve your current skill set or add entirely new skills to your repertoire.
- Pay for conference, membership or subscription. Networking is always a great way to advance your career, and you can do it at meetings and conferences. Take a look at some of the best in your area. Or pay for a professional league subscription or a local chamber of commerce membership. These are all great ways to meet new people who can help you in your career or be valuable contacts in the future.
- Refresh your work wardrobe. If you want to move up the career ladder, you may need to look more professional to do so. Invest in a new suit or professional capsule wardrobe that will truly surprise your boss, coworkers, and clients when you get back to work after the holidays.
Your family’s safety
You may be putting off a few things that are necessary for the future safety of your family. Consider the following options for receiving holiday money:
- Pay a lawyer to write a will. If you do not already have a will, this is necessary. Check with your local lawyer to have it drafted, especially if you have children to take care of if something happens to you. It’s never fun to think about death, but creating your will is absolutely essential. Making a will online is easy too. Check out our article on the best testament makers on the Internet.
- Get liability insurance. An umbrella liability insurance policy can cover the gaps left by your homeowner and car insurance. These policies are not needed by everyone, but they can offer excellent protection for those who need them. Consider adding a significant amount to your liability insurance premiums with a cash bonus.
- Buy a term life insurance policy. Term life insurance is a smart option for most consumers, especially young people who will probably only need insurance for a couple of decades. Research the type of policy that best suits your specific needs and then pay the annual premiums in advance with your bonus. Find out more in our Ultimate Life Insurance Guide.
- Add value to your home. If you are like many homeowners, your home is your greatest asset. You can gain personal satisfaction and make smart financial choices by adding value to your home. Kitchen and bathroom renovations usually provide the most bang for your buck, but first you’ll want to address any unresolved maintenance issues that could lower the value of your home if not addressed.
Getting Started With Some New Year’s Eve Decisions
You might want to spend this money on goals in other areas of your life, such as fitness or intellectual development. If you have multiple non-financial New Year’s resolutions this year, don’t be afraid to promote them with your bonus. Need ideas?
- Buy a gym membership or home gym equipment. Want to get in your best shape this year? Use your bonus for prepaid gym membership. You’re more likely to go if you’ve already paid for it! Or buy the equipment you need to set up a gym at home to make your workout even more comfortable.
- Buy an e-book and a few books from your reading list. If you want to strengthen your mind this year, consider buying a slim e-book reader. Not everyone likes them, but they’re a great option to keep in your purse or briefcase for those short moments you read throughout the day.
- Get a subscription to a magazine or newspaper that interests you. Again, you can boost your intellectual development if you read carefully. Consider using a portion of the bonus for an interesting magazine or newspaper. At the very least, it will help you be more interesting at cocktail parties this year.
Boost your motivation
Sometimes you can show yourself off. If you’ve been managing your income wisely all year, living frugally, paying off debt, or investing, this might be the time. Best time to show yourself off. This can boost your motivation to keep making the right financial choices through 2022. Here are some ideas to spend:
- Find a new hobby. Hobbies are a great way to reduce stress and maintain a zest for life when work gets tiring and financial progress seems slow. Use your bonus to buy supplies for a new hobby or find a local class where you can develop a new skill to hone over the next year.
- Redecorate your home. If you’re bored with your old bedspread and curtains, grab some of the redecorating bonus. New paint and linens aren’t that expensive and can be a great way to start the year with a fresh look.
- Get out into the city. For smaller bonuses, or if you want to use some of them, invite your spouse or family to a nice dinner. To get the most out of it, invest in a restaurant you don’t usually go for. Try something new and make it memorable.
- Take a vacation. One of the best ways to increase your overall happiness is through experiences, not “all sorts of things.” Whether you have a $ 1,000 bonus or $ 10,000 bonus, consider spending some of it on vacation. Plan a summer excursion, a weeklong cruise, or a weekend break to get to know your hometown better.
- Relax. Perhaps this bonus was received after a busy working year. Spend a day at the spa or spend a night with friends to relax. Reducing your stress levels will only help you focus and be more productive after the holidays.
Decide what’s best for you and your family and enjoy what you decide to do with your money!
Will you receive a bonus this year? How do you plan to use it?