What should I be using my bonus on?
I just received your end of year bonus for the first time at the new company that I joined more than a year ago.
I sort of know this money needs to go somewhere.
For others, McDonald’s and that new couch really do sound quite attractive. Or a Christmas party for you and your friends. Or even better, how about a trip to Istanbul? You know you deserve this.
We all have these voices in our heads telling us that we need to spend money on things we need and don’t need. I would like to focus on the things that might help us tonight sleeping better.
Maybe we should rethink where the money is going. Or will be going.
Max out your TFSA with your bonus
If you’re debt-free and want to save for retirement, why not look at maxing out your tax-free savings account (TFSA)?
There are an array of investment opportunities that offer more than cash or equivalents including ETFs with EasyEquities (affiliate link here).
If you want to know more about a tax-free savings account, check my blog post here.
Pay off debt with your bonus
Do you owe people money? Are you in debt? Why not consider paying back people the money owed. I love the old saying: Here are some places you can kill that debt:
- Short term bank loans
- Store cards
- Home loans or car debt – some people have serious amounts of debt here!
- Credit cards
Remember – any debt killed, will boost your cash flow from your monthly income.
Though you might think that a small amount does not make a big difference, think about this: R100 paid off at the beginning of a 20 year home loan could mean a saving of more than R 40 000 in interest.
This is the power of compound interest.
Paying in extra money on your bond could let you pay it off years faster. Why not invest in shares or another type of investment? The world is big and there are loads of different types of investments – from real estate to stocks, bonds and other funds (ETFs, unit trusts, etc. etc.) – why not explore these opportunities?
Warning: Check out the fees and know what you are buying into!
Treat yourself – you deserve it
If you have some money left after investing in the above – getting rid of debt and investing in your future, then you can invest in yourself a little bit.
My suggestion is to invest in things that add value to your life – don’t buy things that will have no or little value later on (such as the newest bestest Porche), but invest in things you will remember for the future – or the little things that will make you feel human again.
Do you owe yourself a side hustle?
It’s always good to invest in a side hustle – something on the side that you love and would love to do. Why not invest in the book ‘The Lean Startup’ and get something off the ground.
Do you owe yourself an emergency fund?
You owe it to yourself to have an emergency fund in case something goes very wrong. If you have three months of expenses to cover if you get retrenched or your car breaks down irreparably, you should be able to sleep a lot more comfortably.
My conclusion is this – think about how you spend your money.
Pay off your debts so you can have better cash flow.
Invest in your future, so that you will not have need.
And invest in yourself today, as you do work hard for your money.