You just found out you got a holiday bonus, and you’re imagining the endless possibilities. But before you go on that shopping spree at the mall or book a flight to the Bahamas, consider spreading the money out to set yourself up for the future. Here are a few ways to make the most out of your bonus:
- Debt no more.
If you’ve racked up any form of debt, make it a priority to get it paid off. It’s most beneficial to eliminate loans or credit card bills with high interest rates, as these will continue to mount for as long as they go unpaid. While it may not feel glorious in the short term, cutting into debt will boost your credit score and save you a ton in the long run.
- Prepare for the unexpected.
If you don’t have an emergency fund, setting one up is a wise step to take. In the unfortunate event that your employment situation changes, or you find yourself facing some unforeseen expenses, any amount of cash set aside will help keep you going in the interim (and save you some stress). If something like this pops up, you’ll be thanking yourself for stashing some extra money away.
- Invest for the long term.
Bonuses vary in size, but any amount invested with the goal of long-term wealth will certainly help. Even minor investments are a good way for rookie investors to get comfortable with the market at minimal risk. Starting at just $250, Summit offers several options for certificates, an invested amount of money that grows over a specific time period. For those on the higher end of bonuses this year, consider maxing out a Roth IRA or investing in stocks, bonds and even real estate, which can provide bigger returns in the long run.
- Time to spend (productively, of course).
If you’ve managed to pay off your debt, set aside some emergency cash AND set yourself up favorably for the long term, congrats! You can now feel free to enjoy everyone’s favorite holiday activity: spending. But while it’s certainly tempting to splurge on something like a television or new clothes, make sure you’re spending wisely. Rule of thumb: Try to spend on items that are a perfect combination of both value and need.
There you have it! Congratulations on your holiday bonus—now it’s time to put that cash to work by following those saving and investment tips. For more financial resources and advice, keep an eye on Summit’s Money Smarts blog.