How to spend your bonus wisely

But beware! That excitement could cause you to make wrong decisions – the consequences of which will haunt you for the next few months. If you want to make your money go as far as possible in these tough economic times, it is important to have a plan for your bonus before you receive it, and stick to that plan when you get your money.

Many people make the mistake of thinking that they can spend as much as they want as they have more money in their pocket. They forget that the season during which bonus money is received comes with a penalty for every dollar spent. Market forces push prices of goods up during the festive season, because consumer demand peaks at this time. This key factor will erode your bonus spending power – so be careful. Don’t think you have a lot of money. Your real consumption level will go up in the face of an increased general price level.

Rather, plan to spread spending your bonus over the next three months. This is vital if you want to avoid a festive hangover and avoid the fatal ‘’January disease.’’ Remember schools fees, rent, utilities and other regular expenses will still be need to be paid.

It is better to use your bonus money to settle those debts that have been accumulating throughout the year. By doing this you will free up your regular salary for the ensuing months. Many people are getting salaries that are below the consumer basket, and they usually borrow to sustain themselves. It is a smart move to pay off your debts and give your future cash flow a huge relief, instead of using the bonus money to appease your shopping demons.

Bonus money is also ideal for property acquisition, as opposed to going for those expensive holiday trips or spending on groceries you don’t really need. This is the only amount of money that is taxed generously by the taxman and is also sufficient enough to allow you to make outright purchases of assets or property. Acquiring an asset on a cash basis allows you to accrue enormous savings, in discounts, as credit purchases are very expensive in the long run. It will therefore be a smart move for you to use your bonus money to acquire property that enhances your quality of life.

There are also many investment options you can consider, rather than blowing the money on haphazard shopping sprees. You can invest it to generate income that will supplement your salary and allow you to shift your real consumption levels upwards for months to come. Those who want to consider this route should leave their money in their bank account, earning interest, while they are drawing up business plans. You may partner with your friends or family, and combine your bonuses together to start an income-generating project.

If you don’t have a plan for your bonus money yet, you should keep it in your bank account for emergencies that may arise in the future. This will also give you an opportunity to think carefully about smarter ways to use it, or to shop in January or February when prices drop and promotions are traditionally held to boost sales.

December will see the festive vibe reaching its fever pitch, with shopaholics going wild. It is a month of thanksgiving, characterised by many ceremonies, such as weddings, memorial services, parties a d other biras. It is important to stay modest and sober with your finances and avoid buying expensive gifts just because there is money in your account. Every financial transaction you do in this season should be carefully scrutinised.

This is also the month when most impulse shopping happens – as consumers tend to easily give in to salesmen’s sweet words and buy things they do not need. Don’t be hypnotised by those carols and flashing Christmas lights, and go into a fantasy shopping realm that says you can afford anything.