Got a Holiday Bonus? Here's How to Stretch It, Grow It, and Still Have Some Fun
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I still remember my first Christmas bonus back in 2008. My boss handed me a check for $100. That was pretty much what I spent in one night at the bars back then (hey, I was 22 -- don't judge me).
But honestly I was just grateful to have a bonus at all.
If you're getting a holiday bonus this year, whether it's $100 or $100,000, it has serious potential if you put it in the right place.
Here are some smart options to consider for that money.
First, treat yourself a little
Before we get into the smart-money stuff, I'm a big believer in celebrating money wins and treating yourself a little with unexpected money. A bonus is a win, after all.
I'm not saying blow it all. Just carve off a small slice for something you genuinely love.
A simple guideline is splitting your bonus 50/50. Half for fun, half for your future.
If you want to save more, I think that's a great move. Any dollars you sock away can put you in a better spot later. But you're an adult and you get to decide the amount you spend or save.
Alright -- fun handled. Let's talk about how to make the rest of that bonus work for you.
1. Pay down high-interest debt
If you've got credit card debt or any loan charging double-digit interest, this is your first stop.
Paying off debt is basically a guaranteed return, and better than any savings account or investment in the short run.
Think of it this way: if your card charges 22% APR, knocking down $500 of that balance is like earning a risk-free 22% return. Nothing else comes close to that kind of ROI.
If you're staring at a mountain of debt, tossing your entire bonus at it might be the smartest move. Or you could look into 0% intro APR balance transfer cards for extra breathing room.
2. Build (or refill) your emergency fund in a high-yield savings account
After debt, the next power move is padding your emergency fund. And a high-yield savings account (HYSA) is the easiest place to grow it.
HYSAs are just like normal bank accounts… but the interest rate is bonkers. I'm talking like 400x the interest rate of a typical checking account.
Some of today's top online banks are paying well above 4.00% APY right now. That's an amazing rate for just keeping your money in the right bank account.
One fintech that's turning heads right now because of its high annual percentage yield (APY) is SoFi®. Read our full account review of SoFi Checking and Savings (Member FDIC) and see if it's a good fit for you.
SoFi Checking and Savings
On SoFi's Secure Website.
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Earn up to 4.00% Annual Percentage Yield (APY) on SoFi Savings with a 0.70% APY Boost (added to the 3.30% APY as of 12/23/25) for up to 6 months. Open a new SoFi Checking and Savings account and pay the $10 SoFi Plus subscription every 30 days OR receive eligible direct deposits OR qualifying deposits of $5,000 every 31 days by 1/31/26. Rates variable, subject to change. Terms apply at sofi.com/banking#2. SoFi Bank, N.A. Member FDIC.
- Competitive APY on both Savings and Checking
- No monthly account fee
- Welcome bonus up to $300 (direct deposit required)
- ATM access
- Unlimited number of external transfers (up to daily transaction limits)
- FDIC insured (up to $3M with opt-in to SoFi Insured Deposit Program)
- Early access to direct deposits
- Tools to help you track savings goals
- Combo account only; no stand-alone savings or checking
- Maximum Savings APY requires direct deposit
- No branch access; online only
- Overdraft protection requires monthly direct deposit minimum
For those who plan to set up direct deposit with their new account, we think SoFi Checking and Savings (Member FDIC) is hard to beat. Not only does this savings account offer a strong APY, but the linked checking account earns an above-average rate, too -- which is a rare perk. Plus, new customers earn a bonus of up to $300 with eligible direct deposit. Frankly, it's the kind of combo that could make it worthwhile to switch banking relationships.
3. Open an IRA or Roth IRA and let compounding do its thing
If you haven't opened an IRA or Roth IRA yet, this is an excellent moment. You don't need thousands of dollars to start -- your holiday bonus is enough.
I like keeping investing super simple. Just invest your money in a diversified index fund, like an S&P 500 fund, then let time do the heavy lifting.
Here's what a one-time $5,000 investment could grow into at different timelines (assuming ~8% annual returns):
| Time Invested | Future Value |
|---|---|
| 5 years | $7,350 |
| 10 years | $10,800 |
| 20 years | $23,300 |
If you're unsure whether a traditional IRA or Roth IRA is better for you, check contribution rules and tax benefits.
My wife and I personally focus on Roth IRAs, as we like the idea of not paying taxes on any growth or withdrawals later in life. See our favorite IRAs for building long-term wealth here.
4. Use a brokerage account for maximum flexibility
If you've already taken advantage of your tax-advantaged accounts (like 401(k) or IRA) the next best place to put extra money is a regular taxable brokerage account.
It gives you way more freedom for investing. No contribution limits, no withdrawal rules, and no commissions if you go with a low-cost broker like Fidelity.
It's the perfect spot for medium- or long-term goals. Just set it, forget it, and let your bonus grow alongside the rest of your investments.
Final thoughts: stretch it, grow it, enjoy it
That first $100 bonus I got in 2008 disappeared fast. To be honest, I barely remember where it went.
These days, I'm much more intentional with my money. When I get a bonus I put some dollars towards growth, a little for short-term stability, and yes… a little for fun.
Your holiday bonus doesn't need to be huge to make a difference. Point it in the right direction today, and you'll be thanking yourself later in life!
See our top high-yield savings accounts to start 2026 strong.
Our Research Expert
Joel O’Leary is a full-time Personal Finance Writer at Motley Fool Money, covering credit cards, bank accounts, investing, mortgages, and other personal finance topics. Joel has been writing about personal finance since 2018, previously leading editorial content for the How To Money podcast and serving as a resident writer at Budgets Are Sexy. He bought his first rental property at age 18, funding the down payment with savings from his high school job at McDonald’s -- a testament to his lifelong passion for smart money decisions. His work aims to make personal finance accessible and actionable for everyday readers. When he’s not writing, Joel enjoys surfing and spending time with his family.