woman smiling while shopping for clothes in a store

11 Ways to Spend Your Holiday Bonus

If your employer surprised you with a holiday bonus this year, you might be at a loss of how to spend it. Since a year-end bonus is not guaranteed, you probably didn’t include it in your monthly budget.

How should I spend my holiday bonus?

  1. Add it to your retirement account.
  2. Pay off credit card debt or student loans.
  3. Add it to your emergency savings fund.
  4. Start a 529 savings plan for your children’s education.
  5. Save it for a bigger purchase, like a house or car.
  6. Enroll in a course that will help further your career.
  7. Donate it to your favorite charity.
  8. Add it to your Health Savings Account (HSA).
  9. Finish that home improvement project you’ve been putting off.
  10. Make a lump sum payment on your mortgage.
  11. Splurge on a massage or nice dinner to reward yourself for all your hard work.

It’s tempting to just let your bonus burn a hole in your pocket. Depending on how you spend it, it could make a great impact on your financial health.

When you receive your bonus, create a budget for it so you avoid spending it on something you don’t need just because you have some extra cash. Creating a bonus budget can help relieve some of the stress and fatigue you might feel at the end of the year if you’re pinching pennies and trying to make ends meet.

Even if you’re choosing to spend your bonus in a way that will help your financial situation, set some of it aside to spend on yourself. It’s easy to get burnt out if you’re trying to meet your financial goals, so splurge a little to reward yourself.