How to wisely spend your End of the year Bonus (Lumpsum Payment)
It is the end of the year, a great time for all of us, especially our employed friends, why? The end-of-year Bonus of course.
That boost for all the hard work you’ve put in this year, a pat on the back from your employer.
But before you splurge on sherehe, ask yourself what would a financially savvy me do
Well to help you answer that question here are a few things to guide your decisions after getting that end-of-year bonus.
Boost your emergency fund
Do you have one? An emergency fund is a safety net for your finances, such that when things don’t go as planned you have a buffer. This means that when your phone or laptop breaks down or is stolen you have some cash tucked away. Instead of taking a quick loan, you can simply finance this unexpected expense.
An emergency fund should ideally have 3 to 6 months’ worth of your living expenses.
If you have one, great, time to boost it with an extra 10k or so.
Reduce Debt
Do you have any outstanding loans? Yes, well it is time to bring that balance down.
It is as easy as making a lump sum payment, does it have to be the whole bonus amount, no but a good amount. This will lower your repayment period as well as the cost of paying back the loan.
So make that payment using that bonus amount today.
Boost your mid-term financial plan
If you are a parent, set some amount aside for your kids’ education. Do they need new uniforms, books, and school fees paid, budget for these things and set that amount apart.
If you are not a parent, boosting your own education, setting some amount aside for a professional certification course to boost your career trajectory and so on.
Do you have an insurance cover? This is the time to consider making a lump sum payment on those premiums. So that you can take a breather in the new year.
Boost your long-term financial plan
Do you have a retirement plan? Yes, well it’s time to boost your retirement savings with a percentage of that bonus. Your future self will thank you.
What about that house you are saving up for? Well, it’s high time you boosted that savings account or paid an extra amount in that mortgage. This will bring you closer to owning your dream house.
- Boost your investment portfolio
You’ve started investing this year and so far, your stock portfolio looks good, but it can be better.
Put some of that bonus money in your stock portfolio.
To learn more about investing in shares in the Kenyan stock market, sign up for my stock market course, via the link below.
Splurge,
You didn’t think that we wouldn’t enjoy this money, did you? Now that we have catered to our financial future, we can enjoy the now.
Experts recommend that we spend at least 10% of our end-of-year bonus on enjoyment.
That’s it, 6 steps to help you use that end-of-year bonus wisely. Next week we’ll look at a few things you need to check before 2024 starts, that is your 2023 financial health checklist.
In the meantime, you can look at these related articles.
