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5 smart things to do with your year-end bonus
If you’ve received your year-end bonus for the year or you’re expecting it, it can be tempting to consider having a splurge in the name of Detty December or convince yourself you deserve an extravagant treat.
But before you throw caution to the wind and deplete that windmill, take some time to consider how you truly want to use it. No matter the size of your hard-earned bonus, you should think about how it can best serve you and your goals in the short and long term.
Here are 5 ways to use your year-end bonus to expand its benefits into the new year and beyond.
1. Pay off debt
If you have a high-interest debt running, a part of your bonus can help shave a part, if not all of it off. You’ll breathe easy knowing you owe no financial debts to anyone.
2. Grow your emergency fund
2020 has taught us one big lesson- always be prepared for emergencies. Throw some part of your bonus into your emergency fund or use it to create one if you don’t already have it. You want to have a financial cushion in case of life’s unexpected moments.
3. Invest in your goals
Whether those goals include putting aside money for your children’s university education, financing your business, renting a bigger apartment, buying a portion of land, getting an MBA abroad, and more; your bonus will help you get closer to achieving it.
4. Invest in yourself
Perhaps there’s a skill you’ve always wanted to learn – one that could help improve your earning power or land you an entirely more lucrative job? Use your bonus to develop that skill and that’s you investing in your future.
5. Diversify your portfolio
Been thinking of spreading out your investment? Now may be the time to go for it with this bonus. When you diversify your investment portfolio, you minimize the risk of loss such that if one investment performs poorly over a certain period, other investments may perform better thereby reducing the potential losses. You also open different sources for returns while in some cases protecting your capital.
Now, let’s say you’ve got the above-mentioned covered and still have some impressive change to spare from your year-end/13th-month bonus – you can go ahead and give yourself the much-deserved treat and roll into the new year motivated to make a greater impact.
Click here to diversify your portfolio today or reach us via [email protected] for financial advice.
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Personal Finance with Raphael: 5 ways to control Emotional Spending
Emotional spending is an act of buying something for yourself that you don’t need perhaps don’t even really want, as a result of feeling stressed out, bored, under-appreciated, incompetent, unhappy, or even happy. For instance, when you received a raise or on your birthday.
It’s entirely not a bad habit if you can afford to pay for those items seamlessly and have a robust financial plan to cover your goals without having to borrow or struggle to create these plans.
Emotional spending could be a destructive shopping spree to compulsive shoppers and could cause continuous damage to one’s wallet if care is not taken. But don’t fret – we have listed some steps to help control emotional spending. Let’s dive in…
1. Create alternative activities
Are you a compulsive shopper? It’s time to find new activities to keep you busy and take your mind off the need to visit the mall or buy impulsively on your favorite online website.
Secondly, if you use shopping to cure some of your emotional challenges such as when you are unhappy or feeling stressed out hence you have to see a movie, stop at the bar or buy yourself some good stuff- think of a more constructive behavior that can help you save these expenses as they all add up.
Get some exercise if stressed out or lean on family members and friends if you are distressed. If it’s a friend or relative that makes you spend, you can also deal with it by creating other activities that don’t cost much with said person(s).
2. Create a budget to manage unnecessary spending
This includes celebratory. Get the dates and create a budget to manage all these expenses such as someone’s birthday, leaving do etc. Once you finish spending the created budget, that covers it for all expenses in that category.
3. Accountability
Talk to people about your target to control your spending and let them remind you whenever you are about to incur any unnecessary expenses. In addition, you can have a stick-on paper of your needs on your debit card, refrigerator, car steering, etc. so that you can always see your needs before any unnecessary spending. Confront the feelings behind the habit – it can help you get to the root of the problem.
4. Unsubscribe to adverts
Try to stay away from adverts that could cause you to spend unnecessarily either online or otherwise.
5. Wait out impulse spending
When you find something that you feel like buying just because it caught your eye, but you never planned for it, wait it out for 48 hours at least. If you still feel like having it after 48 hours and you still think you don’t need it, wait out another week or month. There is a huge possibility that you can forget about it and let go in 48 hours.
Final words: When you imbibe these steps, you’ve taken a stand against allowing your emotions to come in the way of realising your greatest ambitions.
Need help in creating a financial plan? Talk to us today via [email protected]