Using Big Money to get you Financial Freedom
Best Way to Use your Holiday Bonus
What are you doing with your holiday bonus?
Many people get a large or small bonus around this time of year. Its super tempting to go and spend it all on something fun or even something you think you “need”. Especially when its a performance-based bonus its easy to convince yourself that you “deserve” to spend all of it on something really fun or frivolous.
But, you know what you really deserve? The biggest gift you can give yourself and your family?
Financial freedom and security.
Plan Ahead for Maximum Responsibility
BEFORE you get a bonus or other large amounts of “extra money” is the best time to decide where it should go to make the most meaningful impact on your finances. Large amounts can make the biggest dents in any debt or savings goal and has the added bonus (get it?) of making you feel like your making real progress. Small amounts DO add up but its much harder to see the progress.
Are you one of the lucky few to get a holiday bonus this year? Fingers crossed that I get one this year!
So… what to do with that extra cash?
Here is what I suggest:
If you have a lot of debt then the best thing to do is to put it towards that. Large amounts can really move the needle on your debt repayment plan and will lower your overall interest paid pretty significantly. Put it all towards one of your bills. You can put it towards the debt with the highest-interest rate or you can follow the Snowball Plan and put towards the smallest debt you have. But whichever debt you decided to pay off- put it there! Even if you are not in a strict paying off debt mode- paying off debt is one of the best ways to free up money and reach financial security and freedom.
If you don’t have any debt (good for you!) then you have some options (isn’t it great to have choices!?)
- First of all, take off 10% and put it towards charity. I always make charity a priority in my life. I have a few organizations that I like to give too and I also give to individuals who I personally know are struggling.
- Take 15% and put it in your savings ladder.
Now this is where the choices and decisions begin: