Get a Year-End Bonus? Congrats! Here’s How to Not Blow It

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Nothing’s sweeter — not even Aunt Sally’s caramel cake — than receiving a year-end bonus. This is especially true after you maybe, kind of, accidentally spent an entire paycheck on holiday shopping.

The key to that bonus? Don’t blow it. It’s a once-a-year perk, so make sure you’re being smart.

We’ve got some considerations to help you make the right choice with that bonus — even though we know it’s really, really difficult to not go out and spend it all immediately.

1. Pay Down Some Debt

First thing’s first. If you’ve racked up credit card debt in the past year or have student loans to pay off, consider putting your bonus toward the cause.

We know this isn’t the most exciting option, but it’s a smart one and will make you feel better in the long run. Plus, you could manage to save a little bit in interest.

2. Invest in Real Estate

Obviously you can’t buy a house or a duplex — or even a shed — with your bonus, but you can still invest in real estate with as little as $500. Even better? A company called Fundrise will do all the heavy lifting for you.

Through the Fundrise Starter Portfolio, your money will be split into two portfolios that support private real estate around the United States.

You’ll be able to see exactly which properties are included — like a set of townhomes in Snoqualmie, Washington, or an apartment building in Charlotte, North Carolina.

You can earn money through quarterly dividend payments and potential appreciation in the value of your shares, just like a stock. Cash flow typically comes from interest payments and property income (e.g. rent). (But remember: Investments come with risk. While Fundrise has paid distributions every quarter since at least Q2 2016, dividend and principal payments are never guaranteed.)

You’ll pay a 0.85% annual asset management fee and a 0.15% annual investment advisory fee — but the latter is being waived through Dec. 31.

Interested? Get started with Fundrise here.

3. Make Smaller Investments

If you’re not into the idea of investing in real estate, you could start smaller — with micro-investing.

Make it easy on yourself and use an app like Acorns. It connects to your bank account, credit cards and debit cards to save your digital change by automatically rounding up your purchases.

For example, spend $32.10 at Target, and Acorns sneaks away 90 cents into the separate account — and invests it into exchange-traded funds.

One Penny Hoarder managed to stash $116 away in only a few months this way.

Best yet: Make your first investment, and snag a $10 bonus.

4. Strike Up an Emergency Fund

If you’re like me — or like every other human — saving is probably something you’ve been meaning to do. But putting money aside is easier said than done.

The art of automation will help you with this, though. And so will the prospect of your money making you more money…

We suggest opening a seperate checking or savings account to hold your emergency fund — ideally one that’ll reap interest.

Several of our staffers (including me) use the Aspiration Summit Checking Account. It’s a pay-what-you-want account that pays 1% interest on balances of $2,500 or more (or 0.25% on anything else).

Start with that bonus you just earned; dump it in there. Then, simply set up your paycheck to funnel a set percentage in each month.

Finally: Do. Not. Touch. It.

You’ll be able to watch your balance increase and your interest climb.

5. Establish a Stream of Passive Income

Despite its name, passive income isn’t 100% passive — at least not at first. You’ll likely need to put some time and money in up front, which you can do with that shiny new bonus.

We’ve got a few ideas to get you started:

  • Create an e-course, or craft a lesson plan and list it.
  • Buy a gumball machine.

Want more information on these? Read our guide to passive income.

6. Treat Yo’self

Being financially responsible doesn’t mean you can’t have any fun.

When you’re craving some much-needed me time — which you probably need because you’ve been working hard for that bonus — use the extra money to do something good for yourself.

Pay a babysitter, and lock yourself in your room for a DIY spa day. Or, plan a weekend getaway, and use some of these tricks to keep it budget-friendly.

You could even go out for a nice meal and throw a few back

And, hey, if you do all this on a budget, you’ll have money leftover to use for smarter things. See: No. 1, 2, 3, 4 and 5.

Carson Kohler (@CarsonKohler) is a junior writer at The Penny Hoarder. She’s going to use her bonus to pay off some bills.

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