Struggling from paycheck to paycheck? If so, that year-end bonus might feel more like an unexpected windfall, rather than something you have earned. However, cashing that bonus check and heading to the casino probably isn't your best financial plan. Do you know what to do with a year-end bonus? Make plans now before the money hits your checking account and follow through with your plans.
One thing to remember: Don't count your chickens before they hatch! Remember Clark Griswold? No one wants to spend the holidays waiting on your check to arrive. It's not unheard of for a company to "change its mind" or make changes to their bonus plan.
Post direct deposit into savings. If your company offers this option, choose it! Ask them to put the bonus, or at least part of it, into savings. As Grandma used to say, "Out of sight, out of mind!"
Pay on student loans. Student loans can linger on long after your education is completed. Put some of that bonus towards your student loans. You could get some monthly relief. That is worth more than a few dollars!
Pay on credit card debt. Again, use that bit of bonus to help alleviate weighty credit card debt. Consider this. If you go on a shopping spree, you will have momentary bliss. (Ahh... shoes!) However, if you pay off some credit card debt, you will have more than a few seconds of bliss!
Shore up the emergency fund. Financial gurus like Dave Ramsey recommend that everyone have an emergency fund tucked away, ranging from $1,000 to $3,000. If something happens, like you get a pink slip or get sick, you'll have some padding.
Spend 20 percent, but no more. Yes, you deserve to splurge a little but give yourself a cap. Buy something you can look at and enjoy every day. A relaxing massage or a snazzy pedicure make good splurges, too.
Donate something to charity. It never hurts to pay it forward! Consider giving a portion of your bonus to a worthy charity.
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