Putting Your Year-End Bonus to Work


Filed under: Financial tips


It’s hard to believe, but the end of the year is rapidly approaching! Along with the busy holiday season might come a year-end bonus… How would you spend a windfall of cash?

It’s tempting to dream about vacations or a new car, but often we find that impulse purchases bring regret. According to the principles of behavioral finance, if you make a plan for extra, unexpected cash now, you’re more likely to commit to a wise decision if a windfall comes your way.

So, while we’re dreaming of a year-end bonus, let’s also dream of some productive ways to put that money to its best use…

Pay off credit card debt. This option doesn’t seem the most exciting, but let’s take a look at how credit card interest can impact you over the years. Pretend your credit card has a balance of $3,000, at an interest rate of 15 percent. If you paid only a minimum payment of $60 each month,it would take sixteen years to clear that debt! And, over the next decade and a half, you will pay $3,641 in interest. Essentially, you would have paid more than double the cost of the purchases you originally charged.

But, let’s pretend you’ve wisely avoided credit card debt. You could put that money to better use by…

Stashing it for retirement. Have you contributed the maximum of $18,500 to your 401(k) this year? Or, if you’re over 50, did you make the additional catch-up contribution of $6,000?

If so, congratulations on smart retirement planning. You could also open and fund an IRA, with a max contribution of $5,500 per year (or $6,500 if you’re age 50 or older).

Assuming you’re already making these retirement preparations…

Save it for a rainy day. You’ve been wise to avoid credit card debt, but what happens if you experience an emergency? With cash in an easily accessible savings account, you could avoid digging yourself into debt later.

According to your financial priorities, there might be additional ways you could put a year-end bonus to work for you. Give us a call, and we can help you make a dedicated plan to better prepare for your financial future.


If you would like more information or have specific questions, please contact us using the following form. We would be happy to assist you.

This information has been provided by a licensed insurance professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting the insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax, trust and estate, or investment advice. Infinite Wealth Advisors is not an investment advisory firm.  Investment Advisory Services provided by NAMCOA® – Naples Asset Management Company®, LLC, a federally registered investment advisor, website: www.NAMCOA.com .