Smart Things You Can Do With Your Year-End Bonus Check

Every month famously has the story of the two paychecks: the rent paycheck and the fun paycheck. Your first paycheck of the month will always be dedicated to the boring stuff, like paying rent, keeping the lights on, and keeping the water hot. The second check is the one that can go towards hitting the nightclubs, eating at the occasional 5-star restaurant, and bolstering your vinyl record collection. It’s this type of financial balance that allows you to get out of every month with your head still above water and a smile firmly on said head.

But what about your year-end bonus? In a way, it feels like the ultimate fun paycheck. There are no bills to be paid with it, and depending on where you work, it’s probably a pretty nice chunk of change. Seeing all of those zeroes might get your mind running places you can’t control. How much was that Tesla I saw the other day? How many bottles of beer could this buy?

While it never hurts to buy yourself something nice, try to control yourself! It’s rare to have money come into your account that doesn’t have a predetermined destination. So consider your options on how to spend this newly acquired cheddar. Don’t spend it all in one place, or if you do, make sure it’s the right place.

You could take this as an opportunity to finally get yourself ahead financially instead of constantly fighting from behind. Let yourself do some safe shopping to satisfy the hole burning in your pocket. But with the majority of your check, be smart, and use your year-end bonus on one of the following things.

Invest in Low Cost Index Funds

Justin Timberlake in “The Social Network” famously said, “A million dollars isn’t cool. You wanna know what’s cool? A billion dollars.” Go ahead with spending your bonus with this mentality.Now that you’ve gotten your hands on some money, try doing something instead of just spending it. If you invest your money intelligently, you can turn your bonus into an even bigger bonus. Because one Tesla isn’t cool. You wanna know what’s cool? Two Teslas.

Index funds are a special type of mutual fund that allow you to essentially invest in the well-being of the stock market. Your money, along with the money of several other investors, is pooled together and attached to the fates of a market index like the S&P 500, an index of 500 stocks which essentially takes the temperature of the entire market.

These low-cost index funds are an incredibly popular and successful investment for intelligent stock market investors, and a favorite of Warren Buffett, maybe the smartest investor of all. These funds are an effective method of investment because they have a low initial entry price. They also have low management costs and a consistent return. If you do your research, you can find a number of low-cost index funds that will help you grow your bonus.

Add to Your Savings Account

If you have a job that is giving you a year-end bonus, you are likely long resigned to the often boring nature of adulthood. The word “bonus” is so exciting. It gives you visions of champagne showers and baths in golden coins. But in reality, it probably isn’t enough money to do anything too wild.

Instead, this extra money represents an opportunity to create an actual savings account. Not one that is similar to your childhood piggy bank, that just collects the occasional scraps and loose change that fall to the metaphorical bottom. But a real savings account with a number that’s multiple digits. Something you can fall back in on hard times, or if you choose to spend your next bonus less wisely.

A good savings account will also grow your money over time. Whatever you decide to spend your bonus on will depreciate in value over time; that’s right, even a Tesla. Growing your money by saving it is the smart choice.

Take a Vacation

Now here’s the other side of the coin. Since you’re getting your year-end bonus, that means it’s, you know, the end of the year. So you’ve been working your fingers down to the bone at your exhausting full-time job for another full year. You deserve to see what Hawaii is like, or Rome, or maybe even Dubai.

And it’s not just what you deserve, it might be what you need. It may not even be as financially irresponsible as it feels. If you work yourself into a mental health crisis by the halfway point of next year, that won’t exactly be conducive to your money making future. Taking a week or two off and spending that bonus cash will take the pressure off, and allow you to refocus on your financial goals next year.

Improve Your Living Situation

Everything in a person’s life revolves around their home. It’s where you will start and end every day, ideally anyway, and it’s difficult to have a successful and focused life without a successful and focused home. If you’re living in a skid row apartment that should probably be condemned, it’s unlikely to be a productive and happy space for you.

So consider using your year-end bonus to change all of that. If you’re still an apartment renter, your bonus could serve as a security deposit for your new spot. If you’re a homeowner, that bonus could cover a number of long waiting improvements. Don’t limit yourself either. A new desk and a few repairs could go a long way; but not necessarily as long a way as a new swimming pool.

Fix Your Car

Your car is falling apart. I know this, because everyone’s car is falling apart. Your bonus might not be big enough to afford a new car, but chances are it can help make your old car run like new again. Repairs are often too expensive to fit it into the monthly budget, but the year-end bonus can finally get that transmission sounding the way you want it to.

The end of the year is still more than half a year away, but it’s not too early to start thinking about how you’ll spend your bonus check so it does the most for you in the next year!