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Many Americans have struggled financially during the coronavirus pandemic and have been forced to cut back on expenses as a result. Similarly, a lot of employers have seen their revenue take a hit, and some may need to scale back as well to cope with the ongoing recession.
If you normally get a holiday bonus at work, you may find that this year's payday is either less substantial than previous years or nonexistent. But what if you're fortunate enough to snag a generous holiday bonus? If that's the case, don't let that money go to waste. Here's how to put it to excellent use.
1. Pad your emergency savings
At a time like this, it's more important than ever to have a healthy savings account balance -- ideally, one with enough money to cover three to six months of living costs in case you lose your job. If you're behind in the savings department, be sure to stick the majority of your holiday bonus, if not all of it, in the bank.
2. Pay down costly credit card debt
If you're sitting on a credit card balance, your holiday bonus could be just the windfall that helps you eliminate it or get it down to a much lower number. The less you owe, the less money you'll throw away on interest, so the sooner you can get rid of your credit card debt, the better. Having less debt could help your credit score improve faster too.
3. Contribute toward retirement
Your retirement may be many years away, but it sure isn't going to pay for itself. You'll need to save well during your career to ensure you have enough money to live comfortably as a senior, and the sooner you start, the more wealth you stand to accumulate. If you're sitting on a holiday bonus, consider putting at least some of it into your IRA or other retirement plan. You'll get the peace of mind that comes with knowing you're doing your part to secure your future.
4. Pay a large upcoming bill
Maybe you own a home and have a quarterly property tax bill coming up soon. Or maybe your annual life insurance premium will be due in the next couple of months. Using your holiday bonus to tackle a substantial expense on the horizon will give you more flexibility in your budget in the coming months. That way, if unplanned bills arise, or if something happens to your job, you'll be less stressed.
5. Advance your career
Is an online course or certification standing between you and a better, higher-paying job? If so, using your holiday bonus to pay for that extra knowledge or licensing is a smart idea, as a little investment now could result in much more generous paychecks afterward.
6. Improve your workspace
If your workspace for the past eight months has been your living room, you're in good company. But your holiday bonus could make it possible to make that space more office-like. You can use that money to buy a roomier desk, a more supportive chair, better lighting, or even a faster laptop. Given the amount of time many of us spend on the job, and seeing as how employees may not return to offices for a long time, it's likely to be a worthwhile investment.
7. Spend some money on self-care
A lot of people have been neglecting self-care during the pandemic either due to financial constraints or a lack of time. And extra money can, to some extent, help with both. You might use that money to treat yourself to a much-needed massage (provided it's safe to get one where you live), or to hire a sitter so you can get a break from watching your children 24/7 (again, assuming this is a safe option in your neck of the woods). Even a modest investment -- a new aromatherapy candle and some bath salts -- could work wonders for your physical and mental well-being. So while it may be best to use the bulk of your holiday bonus to do things like boost your savings and pay off debt, it's not unreasonable to spend a modest portion of that money to help yourself get through the ongoing crisis.
A lot of people won't get an extra dime from their employers this holiday season. If you're in line for a nice chunk of money, don't just blow it. A few smart moves on your part could really make your life better and less stressful in the near term as well as in the future.