Home > Personal Finance > 9 Wise Money Moves to Make With Your Bonus

Comments 0 Comments
Advertiser Disclosure


Excitement is running rampant. You feel like a kid on Christmas morning because you just learned that you’ll be receiving a bonus from your employer for all of your hard work.

And the first word that comes to mind is “splurge.”

Although you may feel entitled to use the funds however you please, there are some wise moves you can make to lighten your financial load, right now or later on.

But there is one thing you must do immediately: Make a plan and execute it promptly so the funds don’t grow legs overnight and run away. In other words, the longer that money sits, the more tempted you may be to spend it.

Here are some suggestions for putting that bonus to good use:

1. Tackle Credit Card Debt

It may not be possible to eradicate what you owe, but paying the balances down can save you money that is otherwise flushed down the toilet each month on interest payments.

The debt snowball method, which suggests that you tackle the smallest balance first to build momentum, is recommended by some, but it makes better mathematical sense to tackle the card with the highest interest rate first.

Here are a few additional tips to help you quickly eradicate those credit card balances.

2. Boost Your Emergency Fund

You can also use the extra funds to beef up your savings account so that a new set of tires, a layoff, a medical emergency or other unexpected event or expense doesn’t immediately turn into a financial nightmare.

And it wouldn’t hurt to shop around at other financial institutions for savings accounts that offer a greater return on your money.

Take a look at “9 Ways to Build An Emergency Fund When Money’s Tight.”

3. Establish a College Fund

Planning to go back to school or help your children pay for their education? Why not start a college fund? A 529 plan is worth considering because it allows you make tax-free withdrawals, as long as they fit the bill for a qualifying expense.

But before making the leap, speak with a financial adviser to determine if other plans, such as the Coverdell education savings account, better suit your needs.

4. Beef up Your Nest Egg

Have you maxed out contributions to your 401(k)? If not, this may be the perfect opportunity. You don’t want to miss out on free money in the form of matching contributions from your employer or the tax breaks derived from pretax deductions of the money you save in it. And you don’t want to retire poor.

Another benefit of beefing up your nest egg is the beauty of compounding interest. It tends to favor those who make smart investments early.

5. Catch up on Past-Due Bills

Have you been hit with a slew of late fees and interest penalties on a delinquent account? If so, that obligation should be at the top of your priority list. Overdue bills are costing you money and likely wreaking havoc with your credit scores.

6. Be Charitable

If you’re in the giving mood, donating funds to a good cause will warm your heart and could reduce your tax liability. To determine which contributions are tax-deductible, refer to IRS Publication 526 or use the online eligibility tool.

7. Invest!

Now, before you dive head first into the world of securities or any other form of unfamiliar investment, speak with a fee-only financial adviser for guidance. The last thing you want to do is fall for some inflated promise you saw on a late-night infomercial.

8. Home Improvements

How about that leaky faucet or ancient air conditioning unit that’s causing your utility bill to spiral out of control? Use the funds to take care of those issues now before they end up costing you more in the long run.

Check out “8 Home Improvement Projects That Pay Off Big.”

9. Live a Little

This suggestion may have caught you off guard. After all, life isn’t about fun and games; most of us have to find a way to make a decent living for ourselves. But you must live a little on occasion to make the most of it.

So allocate a small percentage of your bonus to the slush fund and give yourself a proverbial pat on the back for all of your hard work and accomplishments.

Regardless of which route you take, move swiftly, before temptation knocks at your door.

This post originally appeared on Money Talks News.

More from Money Talks News:

Image: DAJ

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.


Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team