Heartiest congratulations if you have wrapped up or started the year with an annual bonus! Before you get carried away and start spending this extra source of income on all your ‘wants’, how about ensuring that all your ‘needs’ have already been taken care of?
Also if you have been splurging in the holiday season, your bonus presents a great opportunity to get back on track!
- Pay off debts with more than 5% interest rate. This typically encompasses any unsecured debt such as home renovation loans, personal loans and credit card debt.
- Start building/ contribute more to your rainy-day fund. Financial experts agree that it’s optimal to have 3-6 months’ worth of savings to counter any contingencies. Use this bonus to get closer to that amount.
- Start building/ contribute more to your nest egg. Use your bonus to get a head start on your retirement planning. The future you will thank you for it.
- Investing a portion of your bonus is one of the smartest choices you can make. Make informed decisions and choose a relatively safe financial instrument that can help you earn better returns over the long term.
- If you have young children, this additional income can also go towards their tertiary education fund.
- Also, don’t forget to give yourself a little something – think of it as a reward for your hard work in the past year, and encouragement to achieve more in the year ahead!
2019 will be a challenging year filled with uncertainties, and it would serve you well to be conservative and conscious of where your bonus goes.
Share on Facebook Share on LinkedIn Share
