Smart Ways to Spend Your Bonuses
Got bonus, will spend. Is there a smarter way to put your bonuses to more effective uses?
The basic rule of personal finance to always budget your income and prioritise your spending in order of necessities. However very often when we receive a big lump sum of bonus, it can be very tempting to want to splurge it on something extravagant to reward yourself, especially after all those months of hard work that you have put in.
Even so, it is advisable to think a few more steps ahead to put these monies into better use that might in turn help you to lessen your financial burdens in the future and reach your goals faster.
1. Pay off any existing debts
If you are already servicing some debts, do take note as certain loan products such as mortgage loan, vehicle loan or even credit card loans will incur high finance charges along the tenures which makes it even more difficult for you to pay off in the future. In addition, there are also added hefty late and finance charges if you fail to pay up the required sum on time. It is advisable to use a portion of your bonus to pay down the principal sum so you do not end up paying more interest in the future.
If your loans are too much to handle, check back with the banks if they can offer more favourable terms such as lower interest rates and/or reduce monthly payments to a more manageable level.
2. Invest in appropriate products consistent with your risk appetite
When making investment decisions, it is important to choose investments that matches your risk tolerance level.
Be sure to do ample research to make sure that you invest in a suitable product that gives you make the most of what you have. If taking higher risk is not up your alley, saving with banks in Singapore provide stable and predictable returns.
Typically, banks may offer higher interest rates if some criteria have been met, such as crediting your monthly salary with the bank, setting up GIRO payments or meeting a minimum monthly spend on specific credit cards.
Maximise your spending further by using the bank’s digital e-wallets or credit cards that provide additional rewards as you spend. Usually, such rewards are in the form of cash rebates or points when purchasing from selected partner merchants or spend categories.
3. Invest to achieve your financial goals
Do you have a roadmap planned out for yourself and aspire to achieve financial goals you have set for yourself? For instance, to start up your own business?
Then this might be a good chance to get closer to your goals by saving up a portion of your bonuses and growing your own capital.
If there are new skills or challenges that you have been wanting to attempt, it might not be a bad idea to do it now as long as you are sure that you have adequate savings to fall back on during bad times or rainy days.
4. Relax and enjoy
If you have already marked the above 3 suggestions and you feel that you are adequately financially sustainable, relax and enjoy the fruits of your labour by going on a fun-filled vacation to have a short break away from your busy and hectic work schedule. Otherwise, a simple treat for your friends and families will be a good way to express your appreciation towards them as well.
With all said, we are designers of our own journey and how we decide to walk our path is solely dependent on ourselves. While it can be exciting to receive your bonus and tempting to spend it as soon as you receive it, it will be wiser to spend it on something meaningful which will benefit you in the long term rather than the short term pleasure.
Lastly, be sure to follow Credit Bureau Singapore on Facebook for more useful content and tips on how to maintain a good credit reputation. To check your credit score, you can purchase a copy of your credit report at Credit Bureau Singapore.
If you are facing increasing difficulties servicing payments to your credit cards or other unsecured credit facilities, consider attending our weekly Debt Management talks (conducted both over Zoom and in-person at our office), where you will learn more about what to do, when and how to communicate with creditors, what are the common collection actions creditors can take, what are the various debt settlement options are and what is the CCS Debt Management Programme. Click here for schedule.
After attending the talk, you can submit a request for one-to-one credit counselling. Details on the counselling session and instructions on how to arrange for an appointment will be explained during the talk.
Published 26 May 2023.