Bonus Opportunities

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This week Disney announced a 50% increase in the hourly wage paid to their park employees up to $15 per hour. What’s even greater is that those park employees that help maintain Disneyland’s reputation of the park being the happiest place on earth, will walk away just as happy; as they will also receive a $1000 bonus. For those of you who consider that to be chump change and are used to receiving 20 times that amount for your year-end bonus, keep in mind that it’s all relative. I would even argue that being able to prudently manage $1000 is just as telling as how – let’s say -$25,000 is handled. This announcement prompted me to reflect on some smart ways to optimize this once a year, lump sum opportunity. I know you’re probably thinking, summer isn’t even over yet – why are we talking about the end of the year. Well, part of tackling Money Issues successfully is building proactive behavior (in action and in thought). If you are employed by a company that operates on a fiscal calendar then your year end is swiftly approaching in about two months. The second reason for addressing this now is that many of us often spend so much money during the summer on traveling and leisure activity that we anticipate paying off the debt we accumulated with our bonuses. While it may be tempting to spend it all in one place, excessive spending is not necessarily one of the best ways to handle this cash. Yes, you earned it, but this sense of entitlement and instant gratification tends to burn a hole in our pockets and work against what our visions are for our future(s).

Whatever your patterns have been in the past, consider the following for this year:

First things first – Move a portion of it into another account. Ideally a savings account. Let’s Keep It 100, I know I’m not the only one who enjoys seeing my account padded with extra money that can be tapped into at my discretion. For a brief moment, it may look like you can eat what you want when you want, where you want. Or maybe dining out is not your guilty pleasure. Perhaps its shopping or electronics. Whatever it is restricts a portion of this money before irrational exuberance takes over your account and you look up the next month counting down the days until next year’s bonus.

Spenders:

  1. Pay down some of your debt. I know, I know. This is in no immediate way sounds like a celebration. But, the less you pay in interest now increases the more money you are able to save in the long run.
  2. Splurge on an excursion. If you are anything like me, you’d jump at the opportunity for a new experience. Choose something that you and your partner have been dying to do all year long. Those off the beaten path trips are often the most memorable.
  3. Invest in yourself. If you’ve got that entrepreneurial itch or desire to create another source of income, pay this bonus forward to yourself. But, creating a business is not the only way to invest in yourself. What about an extra class, certification or license? Perhaps by this time next year, you’ll be able to market yourself for a raise too.

Savers:

  1. Increase your retirement account contribution. Many companies allow you to make this designation prior to receiving your bonus and it’s also a huge way to save on taxes. If you’ve already maxed out your contribution consider saving in IRA.
  2. Add to your emergency fund. Unless you’ve got three to six months of your living expenses saved up, this is always a great opportunity to bump it up. If you’ve been fortunate enough to have never experienced the loss of a job or an unexpected household expense, as my grandmother would say, “keep livin.” At some point in your life, you’ll be glad you did this.

 

Last but not least, even if you know how much your bonus is, keep in mind that it’s always taxed like regular income. You can thank good old Uncle Sam for letting the air out of that balloon.

Keepers, share below how you’ve typically used your bonus.

 

– Drea

 

Photo Source: Freepik

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