8 Things To Do With Your Year-End Bonus

The 8 best things to do with your year end bonus.

As you recall from our earlier article, it looks like many American’s are going to start seeing their yearly reviews and pay raises coming back but also on the comeback is the year-end bonus.  While the amounts may not be what they once were, it’s still nice to be appreciated and to receive a little something.

Now the question becomes what do you do with that extra money.  Richard Barrington at Forbes came up with a list of 8 suggestions of what to do with that extra money.  His list includes:

  1. Treat yourself – within reason
  2. Pay off credit cards
  3. Get your mortgage above water
  4. Max out your retirement contributions
  5. Start a college savings fund
  6. Rebalance your portfolio
  7. Eliminate checking account fees

We believe this is a pretty good list with a number of options for just about everyone, regardless of where you are in your financial journey and regardless of how big of a bonus you are expecting.

My advice would be to start with eliminating checking account fees. By putting the money in your checking account and leaving it there you have the potential of saving between $8-$20 or more per month, a savings of $240 over the next year.  On top of that you’ll have an emergency cushion for those, well, emergencies. Just remember going out to a fancy dinner is not an emergency.

Next on our recommended list is paying off credit cards.  This is just as good as investing or saving for the long term.  If you are paying, like many of our readers 20% interest or more you will be making a killing by simply paying off these balances.  Again, remember that paying them off and seeing a big available balance should not send you out to the local Best Buy. For the greatest impact for your credit score you want to keep those cards open, using them occasionally for things you would normally pay cash for, and then paying them off at the end of each month in full.

While these are the priorities that we would advise our clients to pursue, we understand that you may have a different opinion. We’d love to hear if you agree with us, or what exactly you plan to do with your year end bonus.

Image By: Mike Poresky

About Anthony Candella

Anthony is the founder and Directing Attorney of YourCreditAttorney.com and has been helping consumers just like you understand and improve your credit and financial situation since 2003.