Feeling flush?

Feeling flush?

 

You may be one of the lucky ones who receive a bonus this time of year. It’s a great feeling to be flush with money! Many of us mentally prepare for this time throughout the year, or shelve expenses for year end, when we know that there will be some extra cash. We start planning what to do with that money long before the day arrives!

But how do you actually make it work for you and make it last? Just blowing it all is easy and it it’s a wonderful feeling to be able to just swipe that card and know it’s all good. Particularly if the year has been a tough one.

So you have this extra cash. Have you considered that there are really only three things you can do with it – spend it, spoil yourself or save it. Most articles written by financial institutions will encourage you to save or invest your bonus, but that is not always realistic. We are whole human beings and there is nothing worse than feeling deprived. We work hard – we deserve some reward. Life is also about balance in many different aspects – balancing today with tomorrow, balancing needs and wants, and balancing our money in the context of the other aspects of our lives (health, relationships and spirituality)

So there is no one right way when it comes to deciding what to do with this extra money. I am a great believer in spoiling myself (using cash of course!) so do that by all means. But also consider some other very useful tips as to how you can put this extra money to use:

If you are use pre-paid electricity, buy an extra R1000 or R2000 electricity so that you stockpile for the future. In this way, you can buy less every month, or still buy what you need monthly, but you have a buffer against electricity increases, and may find yourself at the end of next year with so much electricity that you don’t need to buy any for the month, and then have extra cash to spend.

Pay an extra bit into your home loan. Doing this every year will bring down your repayment term and save you interest in the long run.

Pay off any short term debt (credit card, store cards, etc.) or at least make a serious dent in it.

Do a lump sum injection into your retirement annuity and get a possible tax benefit which you can roll forward into the next tax year. All contributions to retirement annuities, pension and provident funds are tax deductible up to a maximum of 27.5% of your total remuneration or taxable income (whichever is higher), with an annual limit of R350,000.

If you have children, buy everything that you need for back to school in January, early in December – school clothes, stationery, etc.

Set some money aside for short term savings goals – it could be a memorable weekend away, or a durable item that you want to buy.

Last, but certainly not least, take some cash and spoil yourself. Buy yourself something you have wanted for a while, but have not had the cash, go for that spa treatment, or whatever it is that you value. Don’t deprive yourself – you have worked hard the whole year and deserve some pampering, Just do it in moderation and in balance with the other financial needs in your life.

One last work of caution – do not use your annual bonus as a means to incurring more debt by using some of it as a deposit on a credit agreement in order to buy something. Rather use it to pay off debt and if you want to buy a durable item, save up for it.

A bonus is a huge privilege which not many people have, If you are one of the lucky ones, make every cent work for you – it’s not a given but it can be worth ten times its value in future if you make some smart decisions with this money. The power is in your hands.

 

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