For many lucky expatriate workers, the end of the year period means it’s bonus or 13th cheque time. It’s been a long year and you definitely deserve to spoil yourself. But before you look back and wonder where it all went, the important question to ask yourself is if you really need all those impulsive purchases.

According to thebalance.com, bonuses should not be factored into your monthly spending budget as they are not guaranteed income. A company can at any stage decide not to pay bonuses or decide that you did not meet the performance criteria to qualify for a bonus.

You should already have regular monthly savings plans in place to help towards your savings goals, whether it is to pay off debt, saving up for a deposit for a house, buying that new smart flat screen tv or saving for that overseas trip.

A bonus should be used to help achieve financial goals quicker, like paying off debt, or cushioning your rainy day fund or topping up your retirement savings. 

This all sounds very practical and boring you might say, but, the ultimate purpose of this article is to make you think carefully about what you will use your bonus for.

Things to consider before spending your bonus

• If you are the die hard shopping spree type, then try to spend only a portion of the bonus and invest the rest in a savings fund.
• Use part of your bonus to pay off debt first before anything else – You will get out of debt quicker, reduce monthly expenditure, and you can save that extra money for other important things.
• Consider using part of your bonus for that vacation so you don’t break your monthly budget on holiday expenses.
• Create a budget for your bonus as well, so you can allocate and keep track of expenses.
• Always try to save/invest a portion first and then budget for the rest – this will help you grow a nest egg and you won’t have to panic about supplementing your monthly retirement contributions when you are older. Lump sum payments into your pension fund will boost your savings and in turn get you more compound interest earned.
• Use part of your bonus for those practical purchases, like a new bed or new dishwasher. It seems boring, but you will be greatful you bought it when you don’t have to wash all the dishes anymore or you get a good nights rest.

If you are fortunate enough not to have debt or don’t need your bonus for shopping sprees, then it might be a good idea to chat to your financial adviser about investing your lump sum for when you need it later. [email protected] 

Try the new Catalyst app. It offers exposure to world class funds at a fraction of the cost and no monthly commitment. You can contribute whenever you have some spare cash.

The most important aspect of any bonus received, is to carefully draw up a budget to allocate how much will be used for sensible spending and how much for luxuries.

Please note, the above is for education purposes only and does not constitute advice. You should always contact your deVere adviser for a personal consultation.

* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.