5 Best Ways To Spend Your Work Bonus
Written by
Jennifer Taylor
Edited by
Amber Barkley
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Getting a work bonus can feel exhilarating. Whether you were expecting it or it was a surprise, having extra money land in your bank account is never a bad thing.
It can be tempting to spend the money on a lavish night out, expensive new clothes or other extravagances. However, you may regret burning through your bonus, as it could likely be put toward a savings goal or otherwise used to strengthen your financial situation.
Investing your money can be a solid move, but there’s also plenty of other ideas you may want to consider. Here’s a look at five of the best ways to spend your work bonus.
Pay Down Credit Card Debt
If you’re carrying a balance on your credit card, you’re not alone. As of 2023, the average consumer had $6,501 in credit card debt, according to Experian.
Regardless of the amount you owe, you’re likely not just paying down the balance. As of November 2024, the average credit card APR for all accounts was 21.47%, according to the Federal Reserve.
Using your bonus to pay your balance off — or as much as you can — will save you from paying significantly more than you ever charged in the first place on interest.
Replenish Your Emergency Fund
Experts recommend having at least three to six months’ worth of expenses in your emergency fund. If you don’t currently have this much saved, putting at least some of your bonus toward this goal can provide valuable financial security.
Nearly two in five — 37% — of Americans couldn’t afford an emergency expense over $400, according to a survey conducted by Empower. Even more concerning, 21% of Americans have no emergency savings at all.
Having at least some money put aside in an emergency fund will give you something to fall back on if you lose your job or face an unexpected expense. Instead of having to rely on credit cards or loans, you’ll be able to use this money to pay the bills.
Complete a Value-Added Home Renovation
Making strategic home improvements can help you get more joy from your abode, as well as increasing its value.
For example, a garage door replacement costs an average of $4,513, but increases resale value by $8,751 — a 193.9% cost recoup — according to JLC Online’s 2024 Cost vs. Value Report. Another option, a steel entry door replacement, costs $2,355, but increases resale value by $4,430 — a cost recoup of 188.1%.
Even if you don’t plan to sell for years — or even decades — making your property look more polished, fit your personal style or better meet your needs is never a bad thing.
Make an Extra Mortgage Payment
If your mortgage loan doesn’t have any prepayment penalties, using your bonus to make an extra payment can offer multiple benefits. In fact, this could inspire you to do this once a year, which may reduce your mortgage term by a few years.
Making extra mortgage payments can allow you to pay substantially less in interest over the life of the loan. It can also allow you to pay your mortgage off early, so you can enjoy the financial freedom of owning your home outright faster.
Save for Vacation
Travel can be expensive. If you’re planning to take a vacation this year, using at least part of your bonus to save for your trip can help you avoid overspending.
In the third quarter of 2024, the average roundtrip domestic plane fare from Los Angeles International Airport — the busiest airport for domestic passengers in 2023 — was $385.79, according to the Bureau of Transportation Statistics.
Even if you’re planning to drive, you may need a hotel room, which can add up fast. In 2023, the average hotel room cost $167 per night, according to a survey conducted by CheapHotels.org.
If you’re planning a visit to a theme park, you’ll also have to factor in tickets. A one-day ticket to Walt Disney World starts at $119 per person for ages 10-plus.
Using your bonus to save for even one component of your vacation can allow you to create lasting memories with loved ones without going into debt.
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