Before you rush to splurge on a holiday or the latest gadget, consider how to make your year-end bonus truly count. From wiping out debt to building a solid financial foundation, these practical tips will help set you up for a stronger 2025. Insights by Vernon Wessels from Currency.
Not everyone is a top exec. The countdown to that long-awaited year-end bonus feels like it drags on forever, especially as payday approaches. You think, “I can finally splurge on that …” But wait – is that really the best idea? Should you pay off your credit card instead? And what about school fees, uniforms, books and stationery? Sigh.
Life, huh? Adulting. Ugh. The joy of your bonus quickly evaporates. And just wait until the dastardly taxman swoops in and takes his share!
If you weren’t disciplined with your money during the year, this holiday season might call for sacrifices – and a firm commitment to getting your finances in better shape in 2025. Still, there are ways to extract some pleasure from your financial fillip, assuming you received one, while meeting your financial goals.
Here are some tips from Ninety One and a few others on how to handle a bonus:
“The very act of drawing up a bonus budget has mental benefits too – it’s a commitment to sharpening your budgeting skills,” according to Nedbank’s guide to making better choices with your bonus. The lender suggests even considering renovating your home if you’ve paid off your short-term debts and boosted your emergency savings.
Standard Bank Group’s insurance division, Liberty, advises paying school fees upfront, as this may attract a discount, the savings of which can be used for uniforms and other necessities.
But year-end bonuses can no longer be taken for granted and “13th cheques”, which are the equivalent of an extra month’s salary, have been phased out by many organisations.
Debt Busters, a company that helps consumers who are financially stressed and struggling with debt, warns that many businesses are cutting back on expenses by cutting annual bonuses because of South Africa’s tough economic conditions.
“The sad reality is, the majority of consumers don’t use their ‘extra salary’ intelligently. The typical 13th cheque gets spent on anything from extravagant TV screens to fancy holidays, most of which the consumer can’t really afford,” the firm says.
“Many consumers spend their 13th cheque by buying items on credit before they even receive their bonus,” it adds, and then the company doesn’t deliver. “If that happens, you’ll have spent money that you really don’t have and will never get back.”
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