How to actually spend a bonus

How to actually spend a bonus

Often at the end of the year, or at the beginning of the new one will come a bonus from work. Perhaps it’s small, perhaps it’s large. It might be planned for, or it might be a surprise. Regardless of how that money makes it’s way to you – congrats! We all work so hard at our jobs, grinding 40+ hours each week, it feels pretty good when we get a financial reward. I too get an big end of year bonus; except mine comes in February (my company’s fiscal year ends in January). It may or may not come as a shock, but I actually don’t save or invest all of my money, as you might joke with a personal finance blogger about doing. I also don’t spend it all either – let’s be real here – I am after all a personal finance blogger! In an effort to share a little on how I spend my bonus, and potentially inspire you to be more fiscally responsible with yours – here’s how I like to spend my bonuses! 

Save/Invest some

Probably no surprise here but I do typically save and invest some of my bonus. I find that often times each month, my saving contributions are not what I’d like them to be, mostly because other things come up and it’s tough sometimes to control my spending in such a way that I meet my savings goal each month. I actually somewhat purposefully do this; as I’d rather set loftier goals to continually stretch ourselves in savings. I am however making a 2021 personal financial goal (here’s my article on my resolutions) to be more realistic – which means I’ll probably keep saving some of my bonus (as I won’t be saving as much per paycheck)! 

I am attempting to save for BabyMoneyFinance’s college via a 529 plan (What’s a 529 plan?) and have a goal of contributing $4,000/year. As you can imagine, that’s a fair amount to set aside annually, and I’ve already said that I’m not the best when it comes to saving each month. So, typically with my first bonus each year (which is often the biggest), I put as much of it as I can to the $4,000 goal. With the rest of the bonuses, I do try to split it 50-50 between my savings accounts and then invest them (all low-cost index funds). 

I’d say with a typical bonus I save/invest 50% of it. A bonus is an easy way for me to save and invest which my future self will definitely be thanking me for! 

Spend it on something big

Now, onto the fun part of a bonus – spending it! We all work so hard, and Mrs. Money and I run a pretty tight budget so we often reward ourselves with part of a bonus. With past bonuses we’ve mostly put it aside for vacations, even during the COVID pandemic! Whether we’re going overseas on a larger vacation, or taking a late summer long weekend at the beach, we do love getting away, and a bonus is a great way to help fund that!

Depending on you in your situation, spending it on a vacation might not be what you’re looking for, so feel free to spend it on other things that do make sense! 

A pic from a beach trip we made happen in 2020

Spend it on something little

After stocking our vacation fund, I do like to leave a little for smaller fun things. In 2020, this has most often looked like take-out money. We’re not eating out really at all (ok maybe once or twice we did this summer) so take-out is really our big fun event to look forward to. I think it’s important to be able to tangible see the efforts of your hard work (i.e. a bonus) and having it spread out a bit for us via take-out always keep us happy (and fed!) 

Photo by Andrea Davis on Unsplash

Give some away 

Finally, I’ve posted about this on the blog fairly frequently before but I’m a big fan of giving a portion of my money away to charity, and do so with our regular paychecks. I also always try to do the same with bonuses – giving back I find is a great way to be more thankful in my own life and a great way to keep perspective. It’s also a great feeling knowing that I’m able to give back to my community and/or to causes that I care about! 

Summary

A bonus is pretty amazing – and let it be an amazing tool that doesn’t all get spent right away! Be smart and put some of it to work on meeting other financial goals in your life! 

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