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What to Do When You Receive a Bonus

It’s exciting to receive a little extra cash for the hard work you’ve put in. Before you decide what to do with your extra money, consider these six options to ensure you put your bonus to the best use.

1. Boost savings and amplify investments

An infusion of cash can be a great opportunity to boost your savings or invest in the future. Consider allocating some of the funds toward retirement, making home improvements, starting a child’s college fund, building up emergency savings, or investing in stocks or mutual funds.Putting your bonus into investments and savings can be a way to get your extra income to work for you in the long term.

2. Eliminate high-interest debt

Paying off debt may not be the first thing on your mind when you get a bonus, but doing so can save you even more money in the long run. If you have any outstanding high-interest debts, such as credit card balances or personal loans, consider using a portion of your bonus to pay them off entirely or partially. This can help you save money on interest in the long run. Paying off high-interest debt can even free up money in your monthly budget to pursue other financial goals like going back to school, getting a new car, saving for a vacation, or getting a permanent life insurance policy like whole life insurance.

3. Invest in yourself

Investing in yourself can yield long-term benefits, both professionally and personally. Whether it’s developing skills, getting a certification, going back to school, attending industry conferences, or trying a new hobby, dedicating time and resources to self-improvement can be an investment that pays off throughout your life. Professional development can even lead to career advancement and higher earning potential in the future.

4. Seek professional advice

If you’re unsure about the best way to allocate your bonus, consider consulting your financial advisor. They can help you curate a comprehensive financial plan tailored to your circumstances, risk preference, and goals.

5. Give back

If you’ve already taken care of all your financial needs and wants, consider using a portion of your bonus to give back to others. You can choose to support a local cause or donate to a nonprofit organization.

6. Splurge responsibly

Finally, don’t forget to treat yourself! After all, you’ve worked hard all year and deserve a reward. Consider setting aside a portion of your bonus to indulge in something you’ve always wanted, like a vacation, a new piece of technology, or a fancy dinner.

All investments carry some level of risk, including the potential loss of principal invested.

Source: iQuanti

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