For many of us, bonus season sparks these big ideas of purchasing a new watch, going on vacation, or buying a new car. While I’m the first to admit that I enjoy all of the above, and truly believe that rewarding myself for a job well-done can help create a habit of continuing to excel, I still maintain that it’s crucial to spend intentionally, and to have a plan to make sure that you put yourself first.

‘Putting yourself first’ can mean many things. You could buy something really nice, or invest towards furthering your education, or take a course on a topic that you were always interested in. But putting yourself first also means taking care of future you.

New Checking Account Bonus 2020

So, today, I want to focus on a few ways that might not be first to your mind when you think about what it means to put yourself first.

When you're first starting to save, save up a big pile of money in a mutual fund and when you look up and you've got $200,000 or so in there, then you run over and buy a little rental house or something if that's. Regardless of bonus size, I encourage you to use your bonus money intentionally and thoughtfully, which means you need to start your work well before you actually get the bonus money! Do you want to make sure you’re not wasting the opportunity your bonuses. So make sure to use some portion of your bonus to increase or establish your emergency fund. Also, you want to keep this in a very liquid account, such as a simple savings account. This is not money you want to be investing, as you might need to tap into it in just a moment’s notice. Read more about building your. Another way to be proactive with your bonus money is to open or contribute to a 529 plan. Williams says this is an especially smart solution for people with younger kids.

Paying off bad debt

What Should I Do With My Bonus Money

What To Do With Your Bonus Money

“A man in debt is so far a slave.” - Ralph Waldo Emerson

To start, you should use a portion of your bonus to get rid of any lingering credit card debt that you might have. Even credit card debt can stack up and seriously hurt your financial health. With many credit cards charging upwards of 15% in interest, it makes sense to get rid of any balances as quick as you can.

Stock up your emergency fund

What To Do With Your Bonus Money 2020

Traditional advice says to have between 3 and 6 months of cash saved up for any emergency that life might throw at you. This could be anything from being laid off from work to the broken refrigerator that needs repair or replacement. Having enough cash to pay for these unforeseen events will alleviate the financial stress that can come with disaster or mishaps. Trust me, you’ll thank yourself later for having this in place and stocked up when you don’t need to worry about how you’ll pay for a medical bill or repair charge. So make sure to use some portion of your bonus to increase or establish your emergency fund. Also, you want to keep this in a very liquid account, such as a simple savings account. This is not money you want to be investing, as you might need to tap into it in just a moment’s notice.

Read more about building your emergency fund here.

Increase your retirement contribution

Remember me earlier talking about putting yourself first? Take that hard-earned cash, and make it work for future you. Bonus season is one of the best times of the year to add to your retirement goals, because that lump sum can accelerate the effect of compound interest that much more. When you’re selecting a retirement plan, don’t fall into a generic investment product. Take the time to find one that reflects your personal timeline and risk preferences. The worst thing you can do is to not have your investments in line with your risk level, because if you’re overly aggressive in your accounts, but in life you are more risk-averse you could find yourself worrying and losing sleep over it. Retirement is a long-term game that includes the ups and downs of the market, but rewards you for staying the course on your terms.

Put money towards your big life goals

Your debts are paid off, you’re comfortable with your emergency fund, and you’ve contributed a little more to your retirement plan. So now what? After knocking those off, and you still have more money to allocate, why not craft a plan and chase the other goals you’ve had in mind? Whether that’s saving for a downpayment towards a house or flat, or perhaps you always dreamed of starting your own business, these goals take significant amounts of money. This is a great time to create an action plan to figure out how to achieve them, starting with a little extra cash to give you that initial push.

Treat yourself and have fun

So, the first four topics may not have been the most fun. Receiving a bonus is a testament to a job well-done, and now is the time to reward yourself. Go and take a small portion (10-20%), and spend it on whatever you like. For some, it might be a new handbag, and for others, it might be the joy of giving back to the community, or taking a weekend trip. Whatever you fancy, treat yourself and others so that working hard for that next bonus is always a fun and rewarding journey.