Financial New Year Resolutions: What To Do With Your Christmas Bonus

Posted on 11. Jan, 2007 by in Saving & Investing

Some of you – in fact many of you – get some sort of end-of-year bonus. Personally, I don’t – and I’m kind of bitter about it. Can you tell? But I have received a few emails asking what I would recommend doing with that bonus.

If you are one of the lucky ones who received some sort of bonus in your paycheck this month for all of your hard work last year, I would just like to tell you to consider holding off on buying that new high-def plasma TV. Instead, here is what I recommend (in order)

  1. Stash it away in an emergency fund. You should have about 6 months worth of expenses tucked away in a high-interest and no-fee online savings account or money market account.
  2. Pay off high-interest credit card debt. Some might think that this should be the number one thing to do with the extra cash, but when an emergency hits your cash is always going to be available whereas your credit card might be cancelled, lost, or stolen and unavailable for use.
  3. Invest It. 401(k), IRA, your stock portfolio… whatever your current investment strategy is, you can add an instant surge of cash into an account that might take you years to earn otherwise.

So put that bonus cash to good use… and save save save!

Trackbacks/Pingbacks

  1. Did You Get a Christmas Bonus? → We’re In Debt - January 17, 2007

    […] Many companies have stopped giving Christmas bonuses, but now is the time for performance bonuses. What should you do with those bonuses? Well, the good folks over at the Bean Counter Blog have the answer. […]

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