4 Smart Money Moves To Make In 2023 With Your 2022 Year-End Bonus
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Did you get a year-end bonus last year? Consider yourself lucky.
According to Zippia.com, about 33% of companies in the U.S. offer year-end bonuses. The average bonus pay in the U.S. is 11% of salary for exempt employees, 6.8% for nonexempt salaried employees, and 5.6% for hourly employees.
It’s tempting to take the extra money from a year-end – or holiday – bonus and blow it all on new clothes, going out to eat, or buying more significant gifts for family or friends, but now more than ever, your extra money should be put to work.
Here are some smart money moves to make with your year-end bonus that will pay off in the future.
Start A Side Hustle
It’s never been easier to start a side hustle, and if you’ve been putting off that business idea because you don’t have the money, now you’ve got no excuse. All you need to get that side hustle off the ground is the extra money from your year-end bonus, a few helpful apps, and a little extra time each day dedicated to turning the side business into a reality.
Even if you’re not quite sure what time of side hustle to start, investing the extra money to make extra money throughout the year is a smart money move. You can take the extra money and invest in alternative assets using a service like CrowdStreet or YieldStreet.
If that doesn’t sound appealing, check out these high-paying online side hustles, and one might spark your interest.
If you’ve already got the side business going, the extra money should go back into that business to make it even more significant.
Make Extra Credit Card Payments
If you’re like a lot of Americans, you’re probably in credit card debt. Paying off all credit card debt should be the ultimate goal, but in the meantime, making extra credit card payments by using your year-end bonus is a wise move. Making an additional credit card payment each month not only lowers your balance but it helps with your credit score.
“You may already know that a large part of your credit score is based on your credit utilization—the ratio of your credit card balance to its credit limit. The lower your balance is relative to the credit limit, the better it is for your credit score.
You can control the balance that’s reported to the credit bureaus by sending multiple credit card payments. It means that more of your balance is paid off by the time your billing cycle ends, thus lowering your credit utilization and improving your credit score.
It can be especially helpful to make multiple credit card payments if you’re a big spender. Spreading your payments between paychecks can keep your bank account more level throughout the month as opposed to dropping a large lump sum on your credit card balance all at once.”
Instead of making just one extra credit card payment with the holiday bonus, split the amount down to a few additional payments over the next few months.
Start A Summer Savings Account
We know what you’re probably thinking. “The last thing I need is another savings account to monitor!” A summer savings account is slightly different than the money you’re putting away for retirement or to purchase a big-ticket item at a later date.
When the weather turns warm, and people come out of hibernation, there are more leisure activities like weekend trips, backyard parties, and extra vacation days. People tend to ignore the budget in the name of fun. Summer is the second most expensive season of the year – behind winter and the holidays – and people spend an average over move than $2200 during the summer.
Instead of pulling money from your budget for summer activities, or putting all the fun on a credit card, put away your holiday bonus to use in the warmer months. You don’t even need to start actual savings account for the money (unless you don’t trust yourself). Just take the extra funds, stick it in a drawer, and forget the cash until the weather turns warm. If you think you’ll eventually spend the money if it’s sitting in a drawer, have you tried the freezer trick?
Invest In Yourself
This investment is the most crucial, so we saved it for last.
When was the last time you invested money in your future? We’re not talking about any of the above suggestions. People tend to graduate college, start a career, and then do just enough to advance in their career to save money and retire. People stop learning once they leave higher education.
Taking the money from your year-end bonus and investing the money into yourself will pay off in the long run. There are countless ways to invest in yourself, from learning a new skill, traveling for learning, getting a trainer, or taking classes for work and passion projects. These activities are an investment in yourself, which helps create a better version of yourself. The better version of you might get a better job, earn more money, and earn an even bigger year-end bonus next year.