If you are fortunate enough to get a holiday or year end bonus it can be very tempting to just blow it. This is of course the time of year when it is very easy to overspend on gifts, traveling, and/or experiences, but don't do it. This week on Fox 59 I talked to Ray Cortopassi about how you can make the most of your holiday bonus.
We all have bad money habits, so getting an influx of bonus cash can exaggerate those bad habits. But chances are you are reading this because you are concerned about your financial wellness so let me help you make better decisions. My tip for making the most of your holiday bonus is to think of your big three components of budgeting: emergency fund, debt, and savings.
Your emergency fund should have a bare minimum of $500, if your emergency fund isn't there then your entire bonus should go toward that. If you have at least $500 in your emergency fund then I would recommend putting a third of the bonus into your emergency fund, a third toward any debt, and a third in our long-term savings fund. But, if you need to feel the reward of your bonus you could use one of the thirds toward a something fun (just please, not a catamaran).
Your holiday bonus can feel like a way to ease the financial stress of the holidays but don't let that get you sidetracked. Remember, you should be able to pay for gifts with cash and if your goal is to get out of debt then the holidays isn't a time to slack off.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.