The good news for American workers is this: Year End Bonus amounts are increasing. The bad news, which will come as no surprise to many of us: They aren’t so common anymore.
According to Accounting Principals, a staffing and recruitment firm, year end bonus payouts in 2017 are increasing in value by 66 percent, but only 63 percent of hiring managers said their company plans to give them. That’s down from 75 percent in 2016 — a 16 percent drop in just one year.
If you are among the lucky ones to earn a year end bonus, congratulations! But don’t spend that money without a plan.
Here are four savvy ways to spend your year end bonus
Look at your financial goals:
What do you want your money to do for you this year? Pay down debt? Save up for retirement? Build a down payment for your first home? Send your child to college? Boost your emergency fund? Especially if you haven’t made good on your goals in 2017, prioritize your needs and use your bonus to get closer to them so you can start the new year on the right foot.
Make those repairs:
There’s nothing like an emergency car or home repair to really set a budget back. If your car needs new brakes or there’s a leak in your roof, a bonus is a great way to fund needs like these so those expenses don’t cut into your day-to-day essentials.
Spend it on yourself:
A fancy vacation sounds fabulous, but what about completing a course or certification program that could boost your skills and get you a better paying job? The best certifications can increase starting salaries by 10 percent or more, according to Robert Half, a professional search firm. Local community colleges are a great place to find affordable job skills programs. The American Association of Community Colleges has an online college finder so you can find one near you.
Treat yourself — within reason:
Let’s face it, we all work hard. So, with that bonus, plan a little something special to celebrate your hard work for the year. It doesn’t have to be expensive — maybe an at-home movie night with pizza, a trip out for ice cream or a do-it-yourself spa treatment at home.
Whatever you do with your bonus, it’s important to remember that it is never part of your guaranteed income — even if you’ve received one every year. Whether it’s a corporate merger, a downsizing or simply new leadership, employers, for many reasons, can nix year-end bonuses.
Never expect to be able to use it to cover your day-to-day costs or include it in your annual budget as part of your earnings. Instead, consider it a nice extra supplement to your income and funnel it toward activities that will help you move toward better financial health.
If you are experiencing financial difficulty and are looking for a solution, non-profit credit counseling can help you make sense of all your options. Contact us today for a free financial assessment with one of our certified credit counselors.