There is nothing like knowing there’s extra cash to be spent. You have just been rewarded for your efforts; you’re enjoying the feel-good factor emotion, and are probably tempted to let the sensation flow. Here are a few things you should physically stop yourself from doing; and some you could do instead.
1. Thou shalt not mall crawl.
The last thing you should do is head to the mall – the haven of retail nirvana that’s perfectly capable of guzzling down every last penny that you earned. Shut those outfits from the edgy designer that you have been eyeing out of your mind and reconsider your wardrobe makeover – your look needs no improvement!
What you should do: If it is self-improvement that floats your boat, then know that self-improvement does not always require you to splurge on clothes, bags, and shoes. Invest in yourself by paying for a gym membership or a personal trainer. Even not-so-fashionable clothes look great on a hot bod! You could join that online course you have been thinking about. Self-improvement in terms of skills will probably get you a larger bonus next time.
2. Thou shalt not fritter away your bonus.
It is so easy to treat your hard earned bonus as ‘cash’, letting it remain in your account and enjoying that warm feeling you get from a healthy balance. Except the healthy balance was not meant to remain. You will spend it callously on little meaningless things and before you know it – poof, it’s gone!
What you should do: Do something consequential with the money – if you must spend it, plan a holiday or an experience that you will cherish forever. Take a memorable trip with the family, plan a vacation with friends, or use it as down-payment for your home.
Smart spending tip: For your holiday bookings, sign up for the DBS Altitude Visa Signature Card or Citi PremierMiles Visa Card. These cards give you additional miles for travel bookings and offer attractive sign up bonus for new applications!
Read also: Can Money Buy You Happiness?
3. Thou shalt not create a vicious cycle.
The most tempting thing to do is spending your bonus as part payment for some big ticket material item that you have been aching for. You may get that sense of achievement, but the fuzzy feeling vanishes as soon as you realise that the next instalment is due. All you managed to do is create more debt!
What you should do: Paying bills and settling debt may not be everyone’s dream idea of how to spend your bonus, but think about it. Imagine a life devoid of the recurring monthly pressure to pay some outstanding amount. Bliss! Without the stress, you’ll probably end up saving a bunch on medical bills as well. Win-win!
4. Thou shalt not assume continuity of bonus.
Just because you got a bonus this year does not mean that you will get one next year, or that it will be of the same amount. Never make the mistake of including the bonus amount in the following year’s financial planning – you are liable to get caught off guard and your financial planning will be in complete turmoil.
What you should do: Treat the amount as a windfall and channel it straight to another account, which should become your emergency fund. Everyone must have an emergency fund – cash in a savings account – that is to be used strictly for contingencies. Those months between jobs or a medical situation not covered by insurance happen to everyone.
5. Thou shalt not spend your bonus before you get it.
We know about temptation and how it works, but the worst mistake you can make is giving into this evil, anticipating your bonus, and spending it on your credit card before it arrives. Remember, you have no clue about the exact amount you are to receive, and how much will be deducted for taxes. So never count your chickens before they hatch.
What you should do: Wait for your bonus, work out the technicalities, and separate an amount that you wish to spend as cash. After all, your bonus is a reward for all the hard work that you put in and you must enjoy it. Being prudent with money does not mean taking the fun out of life. It is more an exercise in prioritising your needs. So have some fun with your bonus; after all, you’ve earned it!
Keep reading the BankBazaar blog for more insights into how we spend, together with tips to master your money and get better at life.