In the words of Vince Vaughn in one of my favorite movies Wedding Crashers:
“ERRONEOUS! Erroneous…erroneous on both counts!”
But what I’m really trying to say with the help of Vince Vaughn’s words is:
So you just got a bonus….
$$ CHA-CHING $$
Maybe it was even a day after pay-day…
$$$ CHA-CHING, CHA-CHING $$$
And you’re thinking you could potentially…
Make it rain.
I remember receiving my first bonus. Do you remember receiving yours? The anticipation welling up inside me, my mind screaming “More money!!!” The very day it was deposited into my account, you know what I did? I booked a round-trip flight for a vacation without even thinking about the cost (it was about $400 dollars if I recall correctly). That first bonus that was completely unplanned, why not spend it right away?! Receiving that unforeseen cash flow felt like racking up all those coins in the bonus round when I used to play Sonic the Hedgehog on Segaaaaaa Genesis.
This was before I really knew what was up in regards to personal finance…I could even admit that I’m fairly sure my checking account was only in the double-digit range. I had no emergency savings set aside. I spent that bonus in an absolute flash. At this point in my life, I just relied on my bi-weekly paycheck to cover everything. Even if that meant almost dangerously zeroing out my accounts. I was that college grad who did not have the mindset to even recognize the importance of saving. I mean, how do you handle large lump sumps of cash being deposited into your account when you start a real world job?! Boy, have a come a long way in the last 3 years.
So hold up, wait a minute. Let’s just put a little thought into this bonus of yours that you’re about to receive. Let’s explore some other options that you have, instead of just spending cash money.
Let’s reverse the mindset: instead of figuring out how you’re going to spend your bonus, what are some ways that you can savor it?
Here’s a mighty fine list of things you could do with that extra bonus income:
Beef up your emergency fund
Contribute to your 401(k)/IRA
Add to a savings goal
Pay down debt
Make a contribution/money donation
The following isn’t a limited list, but it gives an overarching idea of how you can wisely put that money to work. All these listed? Yeah, they’re not erroneous by any means when it comes to feeling empowered by your money. Try not to mindlessly spend your bonus (or even count on that bonus coming to cover your actual monthly obligations). That’s when you potentially find yourself getting into financial trouble.
In the pursuit of strengthening your financial game plan, one thing certainly starts to become clear. The amount of money that you take home per month starts to become more than you really need in order to cover your everyday expenses & bills. You start to realize that the next time you get paid, there’s way more in your account because you’re not spending all your money, money in every which way possible.
You’ve become a saver. You responsibly account for necessary big ticket items, trips, and future endeavors (i.e. retirement, building up net worth). When you take control of your finances, a bonus is like an unplanned enhancement towards driving down your debt, contributing to a cause, or paying your future self. The decision is yours whether you want to spend it in a jiffy, or put it towards something that may have a more lasting effect on your life.