Pay Yourself First This Bonus Season!

SGH Wealth Management

Congratulations on another year of outperformance, your company is lucky to have you. Before life expenses get in the way, make sure to use this windfall to get a few steps closer to Financial Independence. (afterwards explore that extra vacation this year…) By creating a habit of contribution, rather than the spare change left over, allows you to be prepared for any opportunity the future may have in store for you.

Here are pointers on where to start:

1. Pay off bad debt – Any high-interest debt like credit card debt or personal loans may deter your ability to save future funds, a double whammy toward progre
2. Construct an emergency fund – Adding an emergency fund to prepare for the unforeseen expense affords more risk-taking ability in your long-term investments. General rule of thumb is to have 3-6 months of living expense in a liquidsavings account for emergency reserve purposes.
3. Increase your retirement contribution – Investing a part of your bonus can give a boost to the compound interest effect of your money, improving your chances of meeting your long-term goals.
4. Focus on Other Big Life Decisions – With the money left over, consider increasingyour savings toward shorter term life goals. Looking to finance a new home/down payment, a new vehicle, or an extended vacation, think about opening a separate brokerage account and automated savings toward these goals.
5. Treat yourself – Once you’ve set priorities for your future well-being, have fun by enjoying the rest of your funds worry-free on anything leftover.

Don’t make this a chore. Streamline these steps above by automating parts of your take-home pay to deposit into retirement or investment accounts. Start at your own pace and don’t miss an opportunity to get one step closer to your financial independence.