What should I do with my bonus?

Making best use of bonuses

Bonuses can sometimes be a perk of the job. When you receive a huge bonus it's a great feeling however many people struggle to figure out how to spend it and can end up wasting it:

If a Company is to incentivise its workforce it is customary to pay a bonus to staff out of the share of profits when the Company and the individuals working within the Company perform well.

What do people do with their bonus?

Well this website is called so you can probably have a guess as to what I recommend! But before we get onto that let's discuss what a bonus is and what most people do with it.

The word bonus refers to "something extra". A bonus shouldn't be expected every year. It is paid on occasion and should be treated as such. Some people use their bonus each year to pay for a holiday or else to pay for Christmas presents. The problem with this is that it is possible to become reliant on these bonuses each year in order to afford these items. Christmas presents and holidays should be property budgeted for from current income if you want them and not come from bonuses. 

Other people can get into the habit of expecting bonuses every year. This is an extremely dangerous expectation as it can lead to lavish behaviour and an individual spending beyond their means.

So what should I do with my bonus?

Given that a bonus should be treated as an addition to your income it is right to reward yourself given the hard work that you presumably put in in order to deserve the bonus. It is okay to reward yourself with some of the money that you've earned. Go out for an expensive meal, buy some presents or go on holiday. Don't do all three unless your bonus was very big! And don't use all of your bonus on these luxuries. 

You should be saving a significant portion of your savings. I suggest that it should be 70% of your net bonus after tax. This is because the addition to your saving and investments will be worth far more in the future as it gains interest (and then interest in the interest etc!).

What I do with my bonus

Whenever I receive a bonus in my pay package (which sadly isn't that often), 70% of the money goes straight into my savings. The remaining 30% gets put into a holiday fund. We already set money aside for a holiday each month so the bonus just tops it up. This allows us to go on a more expensive holiday or else to take an additional small UK based trip during the year. The point is that I haven't relied on my bonus. It is what it says on the tin - a bonus!

Do you like what you've read? Tell your friends by sharing it with one of the buttons below. Please post this to Facebook or Tweet it to help your friends and family. Feel free to send me an email (, find me on twitter @millionairer0ad or comment. Whether good or bad, I want to hear from you all.

No comments