Making the Most of Your Bonus

Receiving a holiday bonus can feel like winning the financial lottery, but how you use it can set you up for future success. Here’s how to maximize the impact:

1. Treat It as a Temporary Increase

This is not a raise! Avoid treating your bonus like an ongoing salary bump. Recognize it as a one-time boost to prevent lifestyle inflation and impulsive spending.

2. Allocate Funds Wisely

Divide your bonus into categories. One possible breakdown could be: 50% for savings, 30% for paying down debt, and 20% for personal enjoyment. This balanced approach ensures both practicality and fun. Remember to pay yourself first!

3. Send Money to Your Emergency Fund

If you don’t already have 3-6 months (for those with steady income) or 6-12 months (for those with unsteady income) of expenses saved, use part of your bonus to fortify your emergency fund. This safety net can be a lifesaver during unforeseen circumstances.

4. Invest in Future Goals

Consider putting a portion into your sinking fund, retirement accounts, college savings plans, or other long-term investments. Even small contributions today can grow significantly over time.

5. Plan a Small Treat

While it’s crucial to use your bonus wisely, don’t forget to reward yourself a little. Use a small portion for a treat or experience that boosts your happiness and motivation. What’s our idea of small at Prosperity? 10-20%.

Follow these tips to make the most of your holiday windfall and set yourself up for long-term success!