If you are employed, you have probably received an invitation to the company  year-end party by now or already have been to one. This is one of those things that remind you that the year is almost over. Soon schools will be closing and people will be going on Christmas holidays. And if you are lucky your employer’s financial year end coincides with the Christmas break, which means that if it has been a good year for your employer and you performed well there will be a bonus coming your way and for some a 13th cheque.

So I thought I would give you some ideas of the top things you can do with your bonus or stockvel payout or any lump sum coming your way during this season in order to give yourself a financial head start in the New Year.

1. Draw up a budget
Remember if you fail to plan you plan to fail. Before that money hits your account you need to know exactly what you are going to do with it. This prevents you from misusing it. Retailers always do a great job of planning for your arrival at their stores during this season. So why not join them too by planning and be ahead of the pack?

2. Pay yourself first
This is a key principle in personal finance and in growing money which speaks to one setting a portion of money aside in savings and or investments before one can spend the rest. This applies to any money you come into, be it a salary, bonus, an inheritance or stockvel payout. It is a great way to develop a saving habit.

3. Pay upfront for monthly costs
Most service providers will give you a discount for paying upfront for services or products because cash is king. Bad debts (when people that owe you do not pay you, it is said that the debt has gone bad) are a real cost that businesses deal with, so trust me they are happy to get the money now rather than later as it saves them on collection fees, while you have the peace of mind of not having to worry about that cost for an extended period of time.
If you are a parent, you can use your bonus to pay for school fees upfront and while at it buy the school stationery and school uniform before the New Year begins. Otherwise use it to pay your insurance or gym membership in advance. Who said that these costs need to be paid on a monthly basis anyway?

4. Pay off short term debt
Short term debt is money that you owe on things like clothing accounts, credit cards and personal loans. Paying some money towards this type of debt is a great way to reduce your indebtedness to others and to ensure that you start the next year feeling lighter.

 

5. Spoil yourself

You deserve it and it is time you thank your body for all the hard work! Now that you have taken care of your adult responsibilities you can splurge on yourself. It could be paying for your next getaway or whatever your next YOLO (you only live once) thing is.

And while at it remember that generosity will never go out of fashion. How about using some of your good fortune to put a smile on someone else’s face this festive season?

How about you? What do you consider to be most important when it comes to how you spend your bonus or stockvel money? What do you spend it on? Comment in the post and let me know your thoughts.