6 Things To Do With Your End-of-Year Work Bonus

You just received an end-of-year work bonus. Congrats! I’m sure this was a nice unexpected surprise. Coming into extra money is always nice because you can use it to get ahead financially. 

While you can easily use your holiday bonus to shop or spend on impulses, this may not be the wisest choice for your situation. Whether you received a few hundred dollars, thousands, or a promotion and raise, you can definitely put that extra money to good use. Here are 6 wise things to do with your end-of-year work bonus.

1. Pay Off Holiday Expenses and Get Current Bills

If the holidays set you back a bit and you need extra cash, your work bonus can be the perfect solution. I always recommend trying to save for the holidays well in advance to avoid getting into debt. However, this isn’t possible for everyone. Life happens and you may not be able to set aside much for the holidays. 

To avoid racking up credit card debt, use your end-of-year work bonus to pay off some cards. You can also use this money to get current on any of your bills. If you have to run your heat more in the winter and the bill increases, this extra money can go toward that utility bill. There’s so much peace of mind that comes with knowing all your bills are paid and credit card balances are at $0. 

2. Pay Off Some Debt

An end-of-year work bonus can put a big dent in other types of debt too. Whether you have other credit cards, student loans, or a car loan, throw some extra money toward these debts before the year is up. 

Not only will you take a chunk out of the balance, but you will save money on any existing interest payments too. When I was aggressively paying down my debt a few years ago, windfalls and extra payments were so helpful. I used to put all my work bonuses toward debt to chip away at the balance. You may not realize it right away, but every little bit counts and will help you become debt-free quicker. 

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3. Top Off Your Emergency Fund

Having a full emergency fund is important no matter what your financial situation. As we’ve seen with a pandemic that’s lasted the span of two years so far, anything can happen and it’s best to be financially prepared. A good rule of thumb is to keep around 6 months of expenses saved depending on your comfort level and other risk factors.

If your job is tied to the economy and would be heavily affected during an economic downturn, you may want to save more. Realize that building your emergency fund may not happen overnight, but it can slowly increase with help from windfalls like work bonuses. The key is to get your emergency fund to a comfortable amount before you actually have to start using some of the money for the unexpected.

RELATED: 4 Reasons to Have a Large Emergency Fund

4. Max Out Your Retirement Accounts

Another great use for your end-of-year work bonus is to max out your retirement accounts. This year, the 401(k) maximum annual contribution was $19,500 and next year it will increase to $20,000. If you have an IRA, you can contribute a maximum of $6,000 each year if you’re under the age of 50. While you may have every intention to max out your retirement accounts, life happens.

If you fell behind on contributions, try to put your end-of-year work bonus toward your retirements savings or investing accounts. Yes, this does sound like a boring way to use the money. However, it’s worth it. Investing more now helps ensure that you’ll give your money enough time to grow in the stock market so you can have a nice-sized nest egg for retirement. Even if you can’t max out your accounts, adding more before the year is up won’t hurt. If you have a pre-tax account like a 401(k), your contributions will be tax-deductible so this can help your financial situation as well.

RELATED: 4 Ways to Maximize Your Retirement Right Now

5. Invest in Yourself

Investing in the market is important, but it’s also crucial that you invest in yourself. Consider putting your work bonus toward something you really want or need that will help enhance your life and/or help you reach a goal. This could be paying for higher education classes in cash so you can get a different degree or certification that can advance your career.

Or, maybe it means investing in learning a new skill online or gaining some hands-on experience in another area. Or, maybe you’ve always wanted to pick up a hobby like woodworking but never had the cash to spend freely on materials.

6. Increase Your Travel Fund

Increasing your travel fund can be a fun way to use your end-of-year work bonus. Traveling can be expensive but this doesn’t mean you should always forego a family vacation or trip with friends. You can stretch $1,000 or even $500 for a fun vacation and a work bonus will always come in handy.

I like to keep a travel savings fund in a savings account separate from my other accounts. I contribute to it regularly so there’s always funds set aside if I need to plan a trip or family vacation.

RELATED: 7 Easy Travel-Saving Hacks For Family Vacations


You may not always receive an end-of-year work bonus. When you do get one, be sure to put it to good use by narrowing down a plan. If you don’t plan how you’ll use your money, your money will easily get used up on other expenses. Once you’ve established a solid budget you can stick to, treat your bonuses like extra money that can help you reach your goals faster.