Tips to Use Your End of Year Bonus

by Emma Anderson Short Term Loan Solutions with Loan

2021 is coming to an end, and you will probably be getting money as a year-end bonus. This is surplus cash that you will be getting in your next paycheque. When you get surplus cash, your priority is always to utilise this money smartly, but you often get confused about where you should use this money.

You may have a long list of things you can do with this money, but again you need to ponder over what suits your needs. You can decide to treat yourself with this money or use this money for your children’s gifts if you have a family.

Well, there is nothing bad if you want to treat yourself or buy your children some gifts, but you need to be more logical and smart while using this money. This money should be looked upon as a windfall that you fall by chance, so you should be very careful while using this money. Several people get extra money, but they fail to utilise the surplus smartly.

Tips for using year-end bonus

If you are going to get a year-end bonus and you have no idea of how you can utilise this money smartly, you should follow the following tips:

· Pay off debt

If you have multiple debts or you have a large debt, you can use this money to pay off the debt. It is not very uncommon to struggle while making debt payments. Even though you have enough money, you cannot be sure about your financial condition in the near future.

You may likely lose your job, or you may come up with unexpected expenditures. It can be quite challenging to pay off your debt in such circumstances. If you have outstanding credit card bills, you should immediately pay off the balance with this money. The will prevent you from making interest payments.

· Put it to emergency cushion

If you are trying to build an emergency cushion to tide over during financial emergencies, you can throw this money into it. This will increase the volume of money lying in your emergency cushion. A rule of thumb says that you should have an emergency cushion worth six months of living cost.

If you have not had enough money in your emergency cushion, you can use this money to top it off. However, if you have a sufficient amount of cash in the emergency cushion, you had better use this money for other purposes.

· Utility bills

You can set aside this money for the payment of utility bills. You know that utility bills are fixed expenses, and you cannot escape them.

Even if you do not have enough money to meet your regular expenses, you will have to pay your utility bills on time because they may affect your credit score. Using this money toward utility bill payments can be a smart decision, especially when you bear high energy charges.

· Drop it to down payment

There are some expenses that you will likely incur in the long run, and they may be long term expenses like buying a car and a home. These are large expenses, and you may need to arrange a down payment in order to take out an auto loan or mortgage.

You can use this money toward making the down payment. However, there are some lenders that say you that you can take out car finance with no deposit and no credit check, but you should still try to set aside some cash down payment. This is because such loans may have strict criteria in terms of your income-earning capacity.

· Contribute it to your retirement funds

You can also contribute this surplus cash to retirement funds. The retirement funds will help you in the golden years of your life. Contributing this money to your retirement funds will always be great for you.

The bottom line

If you are going to get a year-end bonus, you may be confused about how you should use this money, but you can make smarter decisions about the use of these funds.

The tips mentioned above are quite helpful for you to make the most of this surplus cash. However, there are some other ways as well, like investing in these funds.