Are you expecting a raise or a bonus from work? How do you plan to spend this new inflow of cash? Before the money hits your bank account, it’s best to have a plan of action. Instead of increasing your take-home pay by $100, for example, consider these options to make your money go further:
1. Fuel Your Savings
Stocking that extra money in an interest-earning savings account for the rest of the year could really get you out of a bind in times of an unexpected expense or emergency. GoBankingRate reports 57% of Americans have less than $1,000 in their savings account. If this is you, take a moment to prepare yourself for the unknown.
2. Pay off debt
Applying an extra $100 per month to your minimum payment could mean paying off a $5,000 credit card balance in far less time and thousands of dollars in interest saved! Cha-Ch$ng!
3. Buy Disability or Life Insurance
As long as someone relies on you financially, imagine the peace of mind that comes when a financial safety net is in place in the event of an accident, illness or loss of life. More than 375,000 Americans become totally disabled every year and aren’t properly insured. So, if you are the breadwinner, a parent, work in a labor-intensive field, or have been previously injured, take the time to find the right coverage that meets the needs of you and your family.
4. Reward Yourself
This looks different for every person – investing in a course to learn a new skill, taking a vacation, buying new shoes – whatever it is, be sure to take a moment and celebrate your raise or bonus! No one can celebrate you better than you, so show yourself some love!
5. Boost Your Retirement Account
Who’s looking out for your 70-year-old self? A $100 increase in your take-home pay today is less impressive compared to the nearly $200,000 it could grow into over the next 25 years when invested in a pre-tax retirement account. Let the power of compound interest and long-term market performance reward you.
Interested in calculating how your raise or bonus could impact your debt balances or retirement fund? Check out Bankrate’s free financial calculators here.
It’s enticing to take a $50 – $100 increase in your paycheck each month for granted, but when you compare it to these options, you are empowered to make a choice that will positively impact your financial future.
I want to hear from you. How will you make the most of your raise or bonus this season?