What should you do if you receive a bonus? Interestingly, the answer to this question is less about purchasing a one-time luxury item and more about doubling down on making this money work for you.
Put your newly acquired funds to the best use by investing in the following.
If you don’t already have an emergency fund, a sizable company bonus could immediately build one for you. Investing in an emergency fund, especially in today’s inflation-heavy economy, matters not just for unexpected expenditures. It also provides peace of mind in knowing you have a backstop calculated in your savings.
Those with an existing emergency fund may add the bonus to their fund. If you recently dipped into your fund, a bonus can quickly help replenish it and cover additional months of living expenses.
Maxing Out Your IRA
Those with a traditional or Roth IRA may contribute $6,000 to max out their contributions in 2022. (If you are over age 50, you can max out the account to $7,000.)
Even if you haven’t been able to fully max out your IRA for the 2022 year, there’s still time to contribute to this fund. Put your bonus toward your retirement account to max out total contributions.
Recently, GOBankingRates asked millennials about some of the best purchases they made for over $1k. Several millennials we spoke to cited a good mattress as one of their best investments.
Purchasing a high-quality mattress can help relax and heal the muscles and ligaments in your back. Mattresses also have a lifecycle that lasts anywhere from eight to 10 years after purchase. If you have been sleeping on the same mattress for more than 10 years and struggle to get a good night’s sleep, your bonus might be best put toward a new, comfortable mattress.
A sinking fund is a special purpose savings account. You can use this money in a sinking fund to pay off debt or replace an asset.
What makes a sinking fund different from an emergency fund is an emergency fund is designed to cover emergency expenses. If you put your bonus into a sinking fund, however, you could use the fund to pay for medical expenses, home renovations, car repairs or school-related expenses.
This ensures these purchases do not come out of your regular expenses or radically impact your day-to-day spending.
A few well-made items that should make up your capsule wardrobe for a return to the office include simple blouses or solid-toned shirts, tailored pants, a midi or maxi length dress, fitted blazers, neutral loafers and a functional bag for carrying everything you need to and from the office.
Many professionals are returning to work in a physical office. If you are among these individuals returning to work and have noticed your existing wardrobe is worn out or simply needs a refresh, put your bonus toward purchasing timeless apparel, shoes and accessories.
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