5 smart ways to spend your year-end bonus

If you’re lucky enough to get a year-end bonus, choosing what to do with the windfall of cash isn’t always an easy decision.

For most employees, their income is paid out every two weeks or monthly, which is usually just enough to cover fixed monthly expenses like rent or car payments. A bonus is different, however, as it’s a one-time payment on top of their regular paycheck. For many people, it’s the biggest windfall of cash they’ll see all year.

That being the case, a large payout worth thousands of dollars offers an opportunity to cut back on debt, get ahead on retirement savings, and maybe splurge on something nice, too. Below are suggestions on how you can spend your bonus, as typically recommended by financial planners.

1. Pay Off Debt

2. Boost your emergency savings 

3. Put the money away for retirement

4. Invest in education

5. Splurge for yourself

While it’s smart to pay down debt or make contributions to your investments with your bonus, there’s nothing wrong with splurging on travel, shopping or entertainment, either. A bonus is a reward for your hard work, after all, so why not enjoy it?

That said, you could also split the bonus, so that only some of the money is spent on something indulgent. Depending on the size of your year-end windfall, you could still treat yourself to a vacation or a shopping spree after putting the bulk of the funds into investments or education.

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