Who doesn’t like extra unexpected money that makes you feel like you just won the lottery albeit a very small lottery compared to the millions you see won by random people around the world? Last Friday was a bonus week for me. I actually wasn’t expecting it because I was expecting it last month and it never came so I just assumed it wasn’t happening.
Apparently, it just got pushed back due to a new timing on fiscal year stuff….blah, blah, I’m pretty sure someone in finance just totally messed it up. I’ll talk about two scenarios with bonuses that I always see. First, we’ll talk about me because….well it’s my blog and then we’ll talk about what I have seen some of my employees and former employees do.
What To Do With Bonus Money
Anyways I have over $7,000 to play with because I picked up two bonuses. My bonus was a lot higher than other folks because I save the company more money than most people so I get rewarded for saving them all that money.
I’ve actually picked up more in the past so this was kind of disappointing as far as free money goes. I get quarterly bonuses and this is the one quarter where we get larger bonuses than the other three but it came in about $1700 less than last year…but I’m not here to complain about free money. The bigger question is what to do with it.
I am extremely excited when it comes to bonus money. You know major vacation, new 70” TV, jet skis…yeah no… just invest it. To me, you just can’t budget bonus money because what if things don’t work out and the money comes in lower than expected? I just don’t plan a life that way so bonus money is exactly that…a bonus. So it all goes where all my extra money goes and that is to investments.
$5500 goes into the Roth so it can be maxed out and the rest into a taxable low-rate mutual fund because I already have my 401k maxed out at work.
Any side hustle stuff goes straight to my wife. It’s fun to come home and hand in a few hundred dollars and say “here you go!” Actually, it’s really more like, “here you go for putting up with me for the last 7 years…thanks for staying!”
Do Something With Extra Money Right Away
Do you notice a pattern with my extra cash? My bonus and side hustle money is gone almost the instant I get it. I have to do something productive with it right away whether it’s going to in investments or to my sweet wife.
I always tell my wife she can do whatever she wants with it, but she saves it or uses it for groceries. I wish she would go get a massage or go on a girl’s trip or something nice, but it’s not her style. I can’t complain because I said she can do whatever she wants with it and she is careful with her money which is awesome.
Now just because I get rid of it right away doesn’t mean I spend it. I like money, no I love money and want to keep it as much as I can so I put it to work right away. Again anything that is not planned in the budget goes to investments. If I hold it then it likely gets spent on something like a new hybrid golf club which I really don’t need in my golf bag or it sits earning 0.001% or whatever the going rate is for bank accounts.
Please Learn From Horrible Examples
On the other hand, some of my former employees also get rid of their bonuses right away. They love to spend it instantly and I don’t think it even makes it to the end of the day before it is gone to someone else. Most of them are loaded with consumer debt so it would be awesome if they actually helped themselves out by paying some of that off, but that is not their thought process.
They see a bonus as a bonus and free money that they can spend right now. The top thing is to head out to Wendover, Nevada, and go gambling. They end up spending more than they received and come back with more debt than what they started with before they got their bonus. Just plain dumb. I wish everyone hated debt and treated it like the life-devastating disease that it can be.
Now their bonuses are not the same size as mine but they get several hundred dollars and it is always gone by the time they return to work on Monday (we get bonuses on Friday). If they don’t go to Wendover and blow it all there they buy a new tablet or phone or TV. Hey, it’s their money, but you know what, it depends on your attitude and perception of what money is to you.
Bonus Money Isn’t Free If You Are In Debt
If you are in debt guess what a bonus is? No extra money! You are behind and need to catch up. This is money to help you out, not to be spent. Now I’m not saying every penny you earn has to be spent to get out of debt, but you know what a big chunk better go that way. I can see going out to dinner to celebrate, as long as it’s something affordable…let’s not go crazy now, but a $20 meal to keep the positivity of paying off debt is good for the mind and soul.
Over time you will wish that you had put that money towards debt or towards an investment. You just can’t see that today.
What Is Your Money Attitude?
Again it comes down to your perception and attitude toward money. Does a bonus get you excited to spend or to save? Once you get the mindset to save every time you get money…you know what…you are set for life. Mission accomplished.
