Publish Date: 07/03/2019
Maximise your bonus with these 5 steps
Picture this: After a year of hard work, dedication, early morning and late nights, you find out that you’re receiving a year-end bonus. The temptation? To gift yourself with an extravagant purchase and to shower your loved ones with presents that show just how much you appreciate them. Hold your horses! The greatest gift you can give yourself is financial freedom, and with just a few smart moves you can use your bonus wisely.
Step 1: Apply the 50-20-30 rule
The 50-20-30 rule is a budgeting tool for monthly expenses, but you can apply this to your bonus, too. Use 50% of your bonus to pay off debt, 30% for savings and 20% for fun. If your debt isn’t so high, first of all give yourself a high-five for good money management, then deposit a higher percentage of your funds into a savings or investment account. The important thing? Plan how you’re going to spend this precious extra cash because the greatest gift you can give yourself is financial freedom.
Step 2: Pay off high-interest debt first
Student loans and credit cards often have the highest interest rates, so use some of your bonus to pay off this debt. Next year, commit to using your credit card wisely and avoid going into further debt.
Step 3: Create an emergency fund
This bonus is a positive financial surprise – but life can sometimes bring you negative financial surprises, and an emergency fund will help ensure these emergencies don’t throw you into debt. It’s a good idea to save these funds in a fairly liquid, interest earning account.
Step 4: Smart investing
There’s nothing more thrilling than putting your money into a product knowing you’re going to watch it grow over time. The key is finding the product that meets your objectives – how much you want to invest, what kind of returns you want to see and the time period of your investment. If you’re saving for a long-term goal, it’s smart to invest your money rather than putting it in to a general savings account.
If you’re a first-time investor, you might find some of these tips useful to know where to invest money to get good returns for your personal requirements:
Step 5: Have some fun
When you’re done adulting by paying off your debts and investing in your future, let loose and have some fun! Whether your idea of fun is going on a shopping trip, attending a special event or treating others, just remember to stick to your budget.
About African Bank
Our mission is to be a successful Retail Bank offering a wide range of products and services to the consumers of South Africa. The people who work for African Bank represent the diverse population of South Africa; therefore we are a reflection of you, of all South Africans. We seek to provide value - more than our consumers expect of us. We promise to live our purpose 'humanity through banking' in all that we do and we are confident that we can, because 'We are You'.