We are super thankful whenever my husband gets a bonus from his job! A bonus from work can be a reason to celebrate. But, before you rush out and spend it on something fun, you need to be smart.
While you can spend part of the bonus on something for yourself, the rest of the money should be used to help you be financially successful. Let’s look at how you should spend a bonus.
Budget Spending Money
Take 5-10% of the bonus and spend it on whatever you want. You should have some fun with the money you’ve earned. There’s nothing wrong with that. In fact, you should always give yourself some fun money as part of any income you earn. You work hard and if you never spend money on something for yourself, you’ll soon start to hate being financially smart.
Pay Off Debt
If you have debt, put the rest of the money toward paying off debt. You want to always put extra money toward debt. Ideally, you shouldn’t have any debt that can’t be paid off monthly. In other words, never charge more on a credit card than you can pay off when the bill comes each month.
Take Care of Repairs
If your home or car needs repairs, spend the bonus on getting the repairs done. It may not seem fun to put a new roof on your house, but you’ll be glad you did. You may also need to maintain your home or car. You may need new tires or need to get your home pressure washed. Be smart about how you spend your money.
Start an Emergency Fund
If you don’t have any debt, you want to make sure you have savings accounts. If you don’t have an emergency account, you need one. It is recommended that you have 3 to 6 months worth of expenses in the account. Should you lose your job or be unable to work, you’ll know that your expenses are covered.
Pay Ahead on Bills
Another great option is to pay ahead on bills. Instead of paying everything once a month, pay bills a year ahead. You can do this with many subscription services and may even save money by paying for a year at a time. Not to mention, it’s nice to just put money in the bank when you get paid and not worry about getting your bills paid each month.
Don’t spend a bonus frivolously. Be financially smart by paying off debt, getting repairs done, starting an emergency fund, or paying ahead on your bills.