How to spend a holiday bonus
The holiday season brings plenty of good cheer but it can also bring a financial windfall if you're on the receiving end of an employee bonus. Getting a bonus may relieve some of the stress of wondering how you'll pay for holiday gifts but that's not the only way to put it to use.
There are a number of other ways to spend a holiday bonus, however. With the right approach, you may be able to reap the rewards of a holiday bonus all year-round. Here's how to do it.
Play Catch Up With Your Retirement Savings
One-third of Americans have nothing saved for retirement, while 55 percent have less than $10,000 set aside for their later years.
If your retirement account balances are lower than you'd like them to be, a holiday bonus is a prime opportunity to change that.
If you don't have an individual retirement account, for example, you could use a holiday bonus to open one.
Enhance Your Emergency Cushion
An emergency fund can be a financial life raft when an unexpected expense derails your plans. If you'd rather save than spend a holiday bonus, you could use it to jump start your emergency savings account.
But where's the best place to park a bonus? A regular savings account offers safety and convenient access, but traditional banks typically offer very low interest rates. If you'd like to grow your money faster and you don't mind forgoing the ability to visit a branch, a high-yield savings account from an online bank may be the better option.
Just remember to review the interest rates, fees and the options you have for accessing your emergency savings when you need it.
Start Your Home Down Payment Fund
If buying a home is in your future, you'll need a certain amount of cash to seal the deal. A big chunk of that centers on your down payment. In a Zillow survey, more than two-thirds of renters said a lack of down payment savings was the biggest obstacle standing in the way of buying a home.
Invest in Yourself
Treating yourself is one final way to spend a holiday bonus but take some time to think about what would yield the most value. You could go on a shopping spree, for example, but you may get more leverage from a bonus by using it to expand your skill set or develop a side business in addition to your 9 to 5 gig. Alternately, you could invest in a gym membership or exercise equipment to improve your health. Thinking about the goals you want to achieve for the New Year can help you decide how best to spend a holiday bonus on yourself.
There are a number of other ways to spend a holiday bonus, however. With the right approach, you may be able to reap the rewards of a holiday bonus all year-round. Here's how to do it.
Play Catch Up With Your Retirement Savings
One-third of Americans have nothing saved for retirement, while 55 percent have less than $10,000 set aside for their later years.
If your retirement account balances are lower than you'd like them to be, a holiday bonus is a prime opportunity to change that.
If you don't have an individual retirement account, for example, you could use a holiday bonus to open one.
Enhance Your Emergency Cushion
An emergency fund can be a financial life raft when an unexpected expense derails your plans. If you'd rather save than spend a holiday bonus, you could use it to jump start your emergency savings account.
But where's the best place to park a bonus? A regular savings account offers safety and convenient access, but traditional banks typically offer very low interest rates. If you'd like to grow your money faster and you don't mind forgoing the ability to visit a branch, a high-yield savings account from an online bank may be the better option.
Just remember to review the interest rates, fees and the options you have for accessing your emergency savings when you need it.
Start Your Home Down Payment Fund
If buying a home is in your future, you'll need a certain amount of cash to seal the deal. A big chunk of that centers on your down payment. In a Zillow survey, more than two-thirds of renters said a lack of down payment savings was the biggest obstacle standing in the way of buying a home.
Invest in Yourself
Treating yourself is one final way to spend a holiday bonus but take some time to think about what would yield the most value. You could go on a shopping spree, for example, but you may get more leverage from a bonus by using it to expand your skill set or develop a side business in addition to your 9 to 5 gig. Alternately, you could invest in a gym membership or exercise equipment to improve your health. Thinking about the goals you want to achieve for the New Year can help you decide how best to spend a holiday bonus on yourself.
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