What to Do With Your Christmas Bonus

Yes, I know that many companies have done away with Christmas bonuses 😡 . However, there are still firms and even small businesses that decide to reward their employees for all of their hard work and loyalty throughout the year.

If you are one of the fortunate ones who are getting a Christmas bonus this year, here are some ways you can use it:

Pay Down Debt

If you are in debt, then the best use of your bonus check would be to put it toward your debt! This way you automatically earn a rate of return that is equal to the interest rate on your debt. For instance, if you pay off a credit card that had an interest rate of 15%, then that is equivalent to earning 15% on an investment!

Depending on the type of debt, you may have (mortgage or car note for example) to specify that your extra payment is to be applied to the principal of the loan (rather than interest & principal). Do this, and you will now owe that much less in debt!

Ultimately, you want to use this bonus as a way to kick-start your debt snowball.

Save It

The first thing that you want to do here is make sure that you have an emergency fund set up. Once you have one in place, consider saving for your kid(s)’ college education, or putting money away toward a car or house purchase!

Think about other things that may be coming up for your family. Do you own a timeshare or other property with an upcoming maintenance fee? Is your auto insurance premium due soon? – use your bonus to pay it all at once and avoid a processing fee!

Use this as a chance to consider all of the non-traditional and infrequent payments that you make throughout the year. Be sure to set money aside for each.

Invest It

If you aren’t in debt, and you have a good foundation as far as savings go, then investing your bonus might be your best bet. Use the money to open up an IRA and increase your tax refund! If that isn’t an option for you, then use it to set up a diversified investment portfolio and learn how to manage your investments!

Give It to Church/Charity

Whether the priorities above are completely taken care of or not, you may still have a desire to give. There are plenty of organizations that will be able to put your money to good use such as, your local church, a missionary, food banks and homeless shelters, and any other charity that is fighting for a worthy (to you) cause, and has proven to be reliable!
You may even know others who are in need of financial assistance, and your bonus may be the blessing that they need!

Spend a Portion

One of the best ways to stay on track with goals is to reward yourself for your financial discipline. Take a small portion and do something that you have wanted to do, but couldn’t. Maybe go out to a fancy restaurant, or pick up a new article of clothing! Whatever it is, use a part of your bonus (maybe 10-15% or so) to treat yourself. Then take the rest and put it toward your highest financial priority.

Spend It All

If you have already done the above, then just spend it. Be sure to get the most value for your money, and try your best to make a wise decision. There is nothing wrong with using your money to buy something just for fun! Remember, personal finance must always be personal in these sorts of things.

Also, if you have had to make major sacrifices in order to stay on track with your priorities, this may give you the boost that you need to go into next year and fight hard to hit your goals!

Reader Questions:

  1. Are you getting a Christmas bonus this year?
  2. If so, how do you plan on using it?
  3. Have you ever received a bonus?
  4. What is one thing that you would not use your bonus for?

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  1. Khaleef Crumbley says

    Hey Sam, I thought you would have bulked up the scholarship. But I guess if Black works out for you, then you can do even more! 😉

  2. Mysti says

    I got a $200 bonus, and still have $100 left from last year. This will almost wipe out one debt. But I am having a hard time doing it. I tend to save it. However….there is a special purchase I would like, and it is tempting to spend it.

  3. says

    Just got my bonus numbers today! Very Sweet. Plan on splitting it down the middle half on liquid savings, half on car repayment!

  4. Khaleef Crumbley says

    @JohnG, I don’t think I could ever bring myself to advise that! Even if everything else is in order, it just wouldn’t seem right. Maybe you and Sam can take a trip together! 😉

    @Mysti, I think that saving can be tempting. You have to decide if the interest on the debt is worth the additional peace of mind that you get with saving the money.

    @Evan, congrats! I know they aren’t as common as they used to be. I think that splitting it is a good option because you get to see progress in both categories!

  5. Mrs. Not Made of Money says

    Mr. Not Made of Money hasn’t gotten a bonus the last few years. When he did, we would save half and spend half!

  6. Edward says

    I like the idea to pay down debt. However for those that like to have a little fun, I say good luck and here is a 7 – 11 to ya. Rake it in and get out while your ahead big spender.

  7. darrell says

    I just do nothing with it. I don’t treat it as extra money to do stuff with. It just becomes part of all the rest of my money and I do things with my money accordingly with how much I have.

  8. Khaleef Crumbley says

    @Mrs. Not Made of Money and @Dan W., I like the approach of combining spending and saving. It allows one to be responsible but still have a little fun!

    @Edward, it sounds like you and Sam would have a great time together! :-)

    @darrell, so would you just have it go toward whatever your highest priority is at the moment?