Beating Broke

Personal Finance from the Broke Perspective

  • Home
  • About
  • We Recommend
  • Contact
  • Privacy Policy

Powered by Genesis

Beating Broke Rules: Bonuses

December 8, 2010 By Shane Ede 11 Comments

Beating Broke Rule: Spend your Bonuses wisely.

Every year, many of us are lucky enough to receive some sort of bonus from our employer.  (If you’re self employed, that’s bonus enough. 😉 )  And when we do, the inevitable question arises.  What do I do with the money?  And then, how to budget for it?

The simple answer is to spend it wisely.  In a more complex answer, it depends on what your goals are for your financial life.  Using your bonus to buy Christmas presents may make you feel good for a month or two, but will you feel guilty afterward?  You’ll feel much better, in the long run, if you spend the money wisely towards your goals.

198/365 - paydayHere’s the downside to that, though.  You’ll also feel guilty if you use it all for debt repayment.  Each of you will have a different situation, but here’s how we usually use our bonus here in Beating Broke.

Consider taking 10% of the bonus and blowing it.  Buy some presents.  Take your family out to dinner and a movie.  Whatever you want.  Give yourself 10% in cash and free rein to do whatever you want with it. You’ll feel better when you do.

With the remaining, take a look at your situation.  Do you have a purchase that you’ve been saving up for, or putting off until you could afford it?  I’m not talking about those gifts, or the television upgrade, but things that you really need.  Maybe some costco eyeglasses? For example, a portion of my bonus (if I get it) will go towards buying new tires for one of our cars and paying for a repair that one of them needs.  It won’t take the whole bonus, but a good portion of it.  And it will be extremely relieving to not have to come up with that money out of my normal paycheck.  If the bonus doesn’t come, I’ll still have to pay for those things, but it might take a little longer to pay for them.

Maybe your situation doesn’t have a purchase like that that you need to pay for.  But, maybe you’ve got some debt that it could help retire.  What we don’t spend on tires and repairs, will likely go towards paying off a debt.  It won’t pay off any of them all by itself, but it will cut the payoff by several months.  And, while that doesn’t give me the same feeling that just blowing the money on stuff does, it will leave me feeling much better for a far longer time.

The bottom line is this.  Think about how you spend your bonus and spend it wisely.  You’ll feel much better for it.

photo credit: jypsygen

Shane Ede

I started this blog to share what I know and what I was learning about personal finance. Along the way I’ve met and found many blogging friends. Please feel free to connect with me on the Beating Broke accounts: Twitter and Facebook.

You can also connect with me personally at Novelnaut, Thatedeguy, Shane Ede, and my personal Twitter.

Filed Under: Beating Broke Rules, budget, Debt Reduction, ShareMe Tagged With: Beating Broke Rules, Bonus, budget, debt repayment, paycheck, rules

Comments

  1. MoneyCone says

    December 8, 2010 at 3:45 pm

    Your points apply equally to tax refunds!

  2. retirebyforty says

    December 9, 2010 at 6:48 pm

    I’m looking forward to my Bonus at the end of January. Unfortunately, I will have to save this bonus for Tax day – April 15th. I’m pretty sure we’ll have to pay uncle Sam quite a bit this year. We sold some stocks and options and haven’t paid tax on those yet. My exception is also a bit high. 🙂

  3. B.B. says

    December 10, 2010 at 12:09 am

    Yeah, that’s my one fear. With all the side stuff I do and my wife’s business that will be in the black this year, might just go all out and hire an accountant to straighten it all out.

  4. Aloysa says

    December 10, 2010 at 3:18 pm

    We don’t get any bonuses becauseI work for a local government but even if they would pay me a bonus I’d save it for Arpil 15. Just like retireby40. We always owe no matter what I do with tax planning. I just recalled that we got once a $20 Visa card as a Chrismtas bonus. No kidding… It was an internal joke for the next year.

  5. B.B. says

    December 10, 2010 at 3:58 pm

    I am lucky in that I work for a place that is relatively generous. We get a gift card for $25 to a local grocer every year just before Christmas and a rather good performance bonus each year. Of course, the bonus is tied to company performance, but we’ve gotten 75% or more of the bonus every year that it’s been in place.

  6. BeatingTheIndex says

    December 11, 2010 at 6:52 am

    I have not enjoyed a bonus in the last 3 years as 24hr after entering my account they exit as I make a lump sum payment on my mortgage. The good thing about this is that I will be mortgage free in a relatively short time.

  7. B.B. says

    December 14, 2010 at 3:13 pm

    Good to hear you have a plan for it, Evan! So many don’t these days.

  8. Evan says

    December 14, 2010 at 2:53 pm

    I am eagerly waiting for my bonus! I am going to split it up amoung liquid savings, auto loan payoff, dividend producing portfolio and maybe some back into my 401(K) if I haven’t hit my match yet this year.

  9. Bryan at Pinch that Penny! says

    March 7, 2012 at 6:37 pm

    We just found out our bonus information yesterday (it’s routine in my company for bonuses for the previous year to be paid in March…I’m sure it keeps people from thinking about leaving mid-way through the year). Anyways, this year, I’m planning on sticking all of my bonus in my 401(k) largely because my wife (who out-earns me by a significant margin) had offered to give me a little bit of her bonus, and we want to max out our retirement accounts as much as possible.

Trackbacks

  1. Tweets that mention Beating Broke Rules: Bonuses @ Beating Broke -- Topsy.com says:
    December 8, 2010 at 3:56 pm

    […] This post was mentioned on Twitter by Beating Broke, Beating Broke. Beating Broke said: New on Beating Broke Beating Broke Rules: Bonuses: Beating Broke Rules: Bonuses is a post from: Beating Broke, i… http://bit.ly/e1W5Tp […]

  2. Back For Yakezie Challenge says:
    December 10, 2010 at 6:00 am

    […] Beating Broke Rules: Bonuses @ Beating […]

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

  • Facebook
  • Pinterest
  • RSS
  • Twitter

Improve Your Credit Score

Money Blogs

  • Celebrating Financial Freedom
  • Christian PF
  • Dual Income No Kids
  • Financial Panther
  • Gajizmo.com
  • Lazy Man and Money
  • Make Money Your Way
  • Money Talks News
  • My Personal Finance Journey
  • Personal Profitability
  • PF Blogs
  • Reach Financial Independence
  • So Over Debt
  • The Savvy Scot
  • Yes, I am Cheap

Categories

Disclaimer

Please note that Beating Broke has financial relationships with some of the merchants mentioned here. Beating Broke may be compensated if consumers choose to utilize the links located throughout the content on this site and generate sales for the said merchant.

Visit Our Advertisers

Need to change careers? Consider an Accounting Certificate Program from WTI.