How I Used My Annual Bonus
Girl, just when I felt the burdens of being broker than broke my employer decided to hand out annual bonuses. You don't understand how, "on time," this bonus was for me! Before you start asking me how much it was just remember I don't work on Wall St.!
Okay, I obviously wanted to splurge on a few things but I knew there were better choices when it came to cash. So, what is the smart thing to do with a lump sum of unexpected cash? I know... spend the next week acting as an extra in a Rick Ross video and Rihanna's best friend. That's exactly what you should do when you receive a bonus check... NOT! I thought about all I could do and then I came up with a plan. I wouldn't be me if I didn't share it with you right. So, here's what I did...
1. Paid off Credit Cards
Yes, I teach financial literacy for a living and I still have credit cards to still pay off. Shoot me and tell my mom I love her. Listen, almost everybody had their moments after college and so I'm paying for my mistakes but that is OKAY! So, most of that bonus went towards paying off credit cards. I would encourage you to do the same if you're wondering where to put your bonus or even income tax refunds. If you're having a hard time parting ways with the money just think about the monthly payments you will no longer be making because that card is paid off. Also, that means more money in your pocket over time with all of the interest you just killed!
2. I Booked a Trip!
So, this would be my, "splurge," or "treat yo' self," money. I had paid for a ticket to go to the BlogHer Conference in Orlando so I just wrapped up the final details with this cash. When I was on budget I was only looking to stay during the days of the conference but now I am able to stay a little longer and book a nicer room. It will definitely make for a better trip that is work but also a time to relax.
3. Put Money into My Savings
With any new money that you receive you should always aim to save 10%. That's birthday money, side hustle funds and bonuses. All of it is considered income so I put a few dollars in my savings just to feel like an adult with actual goals.
4. Invested in Myself
So, this kind of ties into my trip that I booked since its for a conference but its always a good idea to invest in yourself when you have some extra cash. Take the cooking class you've always wanted to attend or schedule a photo shoot for a new headshot. Use the money to make YOU a better YOU! If you're running a side business what tools or products do you need to purchase to make business flow? Use your 9-5 bonus money to help you succeed. Being successful is not cheap and most often it take money to earn money. Remember that when you're rich and think about those who gave you the advice...
5. Paid off Past Due Debts
Okay, I had a parking ticket from like 6 months ago that was originally $30 but then fees turned it into $100. Do you have anything that is past due or in collections? Pay that... A friend of mine reminded me that unpaid parking tickets in my city will eventually land on your credit report so I had to pay it before I ruined my credit. That was the best damn reminder I've ever gotten! Other things you may have forgotten about are items you've left at the dry cleaner, unpaid copays from a doctor's visit and other little things lingering in the mailbox. Get rid of them and pay now!
So, that is where my bonus went and I'm not mad at the plan I created for myself. Yes, it sucked to have that money in the account one day and gone the next but it felt good to use the money towards things that needed to be taken care of and things that will ultimately benefit me in the long run. After all, its money that I wasn't even expecting so I pretended that it wasn't even there in the first place.
The point I want you to take away is that you should have a plan for your cash. Bonus or not, tell your money what to do and later on down the road your money won't be making decisions for you. Had I made better choices with my money when I first entered the workforce I wouldn't of had to use most of this money towards credit cards. Even if you are in a bad situation financially, its never to late to start and make changes. With that said, what did you or are you going to do with your bonuses? Small or big, comment and let me know. Let's learn from each other!
See you at the top,
The Young Professionalist