Christmas bonuses have long been a standing tradition for employers to show appreciation for their employees’ efforts and contributions to the success of the company.
During this economic difficulty brought upon by the COVID-19 pandemic, probably not many employees will receive any Christmas bonuses. The expectation, however, will linger. Christmas bonuses mainly come in cash which employees may be counting on this year to pay off some debt and/or other bills.
But does Christmas bonuses always go to where it is intended? COVID-19 has taught us about the uncertainties that can disrupt our livelihoods and how it is important to have a financial plan at all times. So, during this period of COVID-19, it is vital to have a plan for your Christmas bonus irrespective of the amount. Below are some insights on what to do and what not to do with your Christmas bonuses.
What not to do
Do not fall into temptation: During this Christmas season, there is certainly a lot of Christmas sales and promotions which may try to reel you in but it is imperative to resist the temptations and try to avoid making that unnecessary spending. Even if you must buy, buy what you need, not what you want.
Purchasing Christmas gifts: Yes, this is the season of giving but it is also the season of challenging economic times, no thanks to COVID-19. Resisting the urge to be ‘Father Christmas’ this season can help you keep your finances in check. If you want to show your appreciation to your loved ones this season, there are many gift ideas you can research which will not break your bank or disrupt your Christmas bonus.
Do not acquire debts: During this time of year, people would like to borrow to have a good time. When you borrow, yes, you will indeed have a good time but you will be complicating yourself by acquiring debt to begin the new year (2021). Begin 2021 with a set of healthy finances.
What to do
Pay your debts: Use the extra cash to pay your current debts. If you are burdened with a single debt, it is time to use that Christmas bonus to pay it off. On the other hand, if you have multiple debts, reduce your debt to ensure some peace of mind and to prepare you for a debt-free new year in 2021.
Make the right investments: If you have no debts, then you should make some investments. There are several investment vehicles to invest in such as Treasury bills, government bonds, and the stock market. It is, however, important to speak with an investment expert or make relevant research into the investment vehicle that meets your needs or requirements. Investing builds wealth over time and hedges you from future uncertainties.
Make a budget: Set up a budget for your Christmas bonus. Make a list and allocate how much you wish to spend, pay a debt, and invest. Without a budget, there is no financial plan, and that could lead to dolling out money where it is not needed.
Reward yourself and plan for contingency: Since Christmas bonuses are given as a reward for efforts contributed, you may want to do just that but you must determine how much you wish to reward yourself. Rewarding yourself with only a portion of the amount is the way to go. You must also set aside some contingency amount during the season to help absorb any shock that may arise.
In times past, if you focused on spending or consuming your Christmas bonuses, it is time to do things differently and cause a change this year. Enjoy this season with a strong financial standing for a prosperous New Year.