Many people around this time get a bonus from their employer. It can so tempting to spend it all, but there are 3 ways to make your bonus go further this year.

Start or add it to your emergency fund.

You should do this first if you don’t have at least $1000 in your emergency fund. One great place to put it is in a high interest savings account, some of which have 4% interest or higher on them.

If you’re depositing at least $250 in, send me an email and I can give you a referral to ING Direct. You’ll get $25 as an added bonus (I get $10 in my emergency fund). That’s a 10% return! Not a bad deal in my opinion.

There’s also HSBC Direct and EmigrantDirect Direct. ┬áIf you have less to deposit, then don’t worry. You’ll have your money grow faster than if you leave it a regular savings account. My old Bank of America account gave less than 1%. Grow your money. Review some tips to grow your emergency fund even more.

Pay down your credit card debt.

Congrats if you have some money leftover from #1 to put towards paying down your debt. This is a step that can make you feel better as your debt shrinks. Depending on the size of your bonus you can completely eliminate your credit debt out take a chuck out of this hairy beast. You can tackle it one of two ways:

  • 1. Go after the small debts and feel great about knocking them out completely. This could be a psychological incentive to continue.
  • 2. Put it towards the highest interest debt and gain a financial advantage.

Either way, just work on this. Also apply this for your high-interest rate debts as well.

Put it in your retirement.

If you still have some money leftover after doing 1 and 2, then please tell me where you work because I would like a bonus like that. J Seriously, though, fantastic job on that bonus!

Make sure your IRA is fully funded or as much as you can. You’ll be grateful down the road when retirement comes and you don’t have to eat bologna sandwiches all day. The maximum contribution for 2007 is $5000.

If you get a bonus at work, what do you plan on doing? If I get one (just an intern), then I’ll do 1 & 2. I’m trying to finish my car loan early, as it has a 13.75% interest rate. Let me know what you would do.

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Photo Credit: elle_rigby