Around this time of year, your employer gives you a bonus. It’s a nice windfall to add to your bank account before you tackle another year at the company. What should you do with this windfall? These are some savvy ideas.
Pay Down Your Credit Card
How’s your credit card balance looking? Is it a little higher than usual? That’s not surprising, considering how common it is to rack up a large balance around the winter holidays. You’ve added charges for holiday gifts, decorations, event tickets, plane tickets, and hotel rooms to your card in a short span of time. It will take you a long time and some careful budgeting to whittle down that balance and get yourback under control.
Your annual bonus could speed up that repayment process a little bit. Adding your windfall (or at least, the majority of it) to your credit card’s balance could help you pay off a significant chunk of the debt. You’ll have less to pay off, and you’ll have to worry less about the influence of compounding interest on the remaining balance. It’ll cut down your repayment time and take some stress off your shoulders.
Build an Emergency Fund
Do you happen to have an emergency fund? If you don’t have one, this should be your New Year’s resolution. You need to build this safety net for yourself as soon as possible.
It will be easy to start this with your bonus. All you have to do is open up a savings account and then put the bonus inside of it. That will already give you a nice cushion of savings to rely on. Then, you can assess yourto see how much you can afford to put toward your emergency fund every month. You’ll want to add that amount to the savings account from this point forward.
Without an emergency fund, you might not have enough money readily available to pay off a surprise expense that comes your way. If one of your pipes freezes, you won’t be able to hire a plumber to thaw it out that same day. If you wake up in the middle of the night with a terrible toothache, you won’t be able to afford an urgent trip to the dentist to fix the problem. If your furnace stops working properly, you won’t be able to get it repaired right away, even though you’re practically shivering from the cold.
If you don’t have an emergency fund, you’re not completely out of options. As long as your balance is nowhere near the limit, you could charge the urgent expense to your credit card. Or you could go to a website likeurgent expenses
Donate to Charity
If you’re in the giving spirit, you could use your work bonus to donate to a charitable cause that’s close to your heart — or even several charitable causes, depending on the size of your bonus. You could make a small but meaningful difference with a single donation.
Donating to a charitable organization doesn’t just benefit the cause it stands for. It can benefit you, too. As long as you make your donation before the end of the year, you can deduct charitable contributions from your income when it comes time to file your taxes. The charitable contribution will have to be submitted to a qualified charitable organization recognized by the IRS.
These are three savvy strategies for what you can do with your work bonus this year. Which one will you do?