How to make the most of a year-end holiday bonus

The recession in Nigeria may make most of the companies reluctant to give out holiday bonuses this year but we believe there are still companies that will not shy away from the practice. If anything, it might reduce the economic stress on their workers and give them something to cheer in what has been an awful 2016 in many ramifications.

Although a bonus can be used in a number of ways imaginable, financial planners say that the best practice is to treat it like you would a paycheck. Do not blow because it is ‘extra’ money. Temper your spending by saving a portion.

You should always crate a plan anytime you receive a year holiday bonus to avoid waking up a month or two later and realize it is no more.

One of the things you should never do is to take a debt while in anticipation of your bonus expecting to pay it off when you receive. Aside from the possibility that it might be delayed or never come if your company had a bad year, but when it does come, it is as good as not there because it would have been spent ahead.

Another thing you should not do is spend it all on yourself or on electronics. A financial expert, Travis Sollinger says “The poor use of a bonus is basically blowing it on something and you get nothing in return. He recommends spending on something tangible that will have value after the money is gone. How about making the down payment for the house? Or paying the mortgage on your property? You can also make an upfront payment for tuition next year; January is not so far away.

Your bonus can also be split toward your tow financial priorities like having six months of expenses in an emergency savings account, and maxing out on your retirement contribution for the year. Building up an emergency fund is a way to have peace of mind.

If you already have a sizeable emergency fund, you can consider donating the bonus to a good cause. But if you do not want to give majority of it away to charity, start a long-term savings goal and tie it to something tangible like your future home or opening a business or even a child’s college education.

Try to project into the coming and identify what might likely constitute a large expense. Set aside money for those large, irregular expenses so you do not stress when they come.

Finally, give yourself a good treat. You do not have to be practical with the entire bonus. Some financial planners suggest spending a third of the bonus on yourself. It is good to enjoy life.

 

FRANK ELEANYA