We are heading towards the end of the year & this is the time where all of us are looking forward for either a long holiday or the year end bonus. For those with family & kids, this is the time for you to bring your loved ones for a holiday especially with the long school holiday. For some of us, this will be the time where we will be thinking about how much bonus we will get or will we even get bonus? LOL. For my company, they will be paying fixed 14 months salary where I will be receiving additional 2 months bonus during the mid of December. For some companies, I heard they may go up to 8 months bonus.
There are many people from various walks of life that I have spoken to over the years on how they usually spend their bonus money. Their answers will usually be a good reflection on how well they manage their money & what is their mindset towards personal finance.
Assuming you have extra bonus around RM10,000. What will you do with the money? Should you spend it on the latest branded handbag, to invest that money or both? Here is what you can do with your year end bonus :
You can spend it on the latest branded handbags, watches, shoes & clothes. Or you may consider spending it for your next trip to countries that you have yet to visit. Why not?
2. Clearing Debts
It can be good debts or bad debts. Those long overdue credit card bills or personal loans can be cleared off with that bonus. A former senior of mine will usually use 100% of bonus to pay off his mortgage loan. That is how he actually shorten the terms of his mortgage loan.
You can consider investing your bonus to businesses, stocks, gold, mutual funds, properties & many others. By investing your bonus to those investments, you may be able to generate extra income for your upcoming years.
4. Save It
This is one of the most general answers that I usually get from most people. Save that cash & put it in Fixed Deposit. With the average inflation of 3%, you may be able to earn a little extra if your Fixed Deposit pays you 4%. That’s how some people become cash rich by keeping their money in Fixed Deposit.
5. Spend It On Your Loved Ones
If you are single, it is good that you can buy your parents a good meal or give them a little extra bonus since they have spent a lot on you growing up. If you are married, buying your kids and wife a little gift which will guarantee to put a smile on their faces.
How Will I Spend My 2 Months Bonus?
I personally believe in having a balance, in life. To tell you that I will fully invest all my bonus is totally a lie. Usually what I will do is, I will be splitting my bonus based on percentage. I will be giving 10% to my mum, 20% to be splurges & 70% to be invested back to my retirement portfolio.
Here is how I will be splitting my money in my retirement portfolio :
2. Cash Savings
Cash savings can be used just in case I found good deals in stocks or other investments. My usual allocation for cash will be around 10% of my retirement portfolio.
My new house will be ready soon. My plan is to allocate a portion of it for renovation & the balance will be used to pay my mortgage. My long term plan is to fully pay my mortgage within 10 years. Based on my calculation, I need to pay extra RM20,000 per annum in order for me to fully pay off my mortgage within 10 years.
How Will You Spend Your Year End Bonus? Since it is still early, there is still plenty of time to plan on how to manage your year end bonus. Leave your thoughts in the comment section below to share on how you will spend your year end bonus.