Receiving an end-of-year bonus opens up a lot of helpful financial opportunities, but most of us will be tempted to spend the money on gifts, gadgets and treats. But your bonus can be used to lighten the load of your financial obligations, if you follow some simple advice.
Of course, not everyone receives a bonus or 13th cheque, but the below tips can be used to make the most out of any cash ‘windfalls’ all year round:
1. Decrease the interest on your home loan: Interest on your home loan is calculated each day on the outstanding balance. If you place a lump sum of money into your home loan account, it will decrease your outstanding home loan amount, which will decrease the amount of interest you will need to pay.
For this reason, depositing your 13th cheque or bonus into your home loan account is a great, money-saving idea in the long term.
2. Reduce debt: If you have too many monthly accounts that are eating into your cash flow (such as clothing and furniture accounts), consider using your bonus to settle the debt and close them. This will free up income from monthly instalments and give you spare cash for savings or investments.
3. Renovate to boosts your home’s value Your home is probably the most valuable asset you will own, so why not boost its value by using your extra cash for maintenance and renovation?
4. Save and invest: If your debt is under control, you can use your bonus to increase your savings portfolio; any lump sum added to existing investments will have a positive impact on their growth.
5. Prepare for emergencies: Why not pre-pay some bills to buy you time in case of a financial emergency. For example, you could make an extra payment into your rates and taxes, bond or car.
For further help devising a secure and prosperous future, visit a financial advisor or visit our Website.