By Dhashni Naidoo, FNB Consumer Education Programme Manager

Receiving a bonus is an exciting event and a time for celebration to recognise the hard work you put in throughout the year. Bonuses also provide us with an opportunity to achieve our financial goals.  When we think about spending the money, we need to do so responsibly.

The 80/20 principle is a good one to adopt. This is where you use 80% of the bonus money towards achieving financial goals, such as reducing debt or saving and investing. Then the remaining 20% as a reward to yourself for those nice to have items.

Here are some practical tips on how to spend your bonus responsibly:

• Reduce debt – make additional payments towards debt and try to reduce higher interest-bearing debt first. Reducing debt helps you to save in the long run, by freeing up cash that you normally use towards debt repayments. 

• Saving for emergencies – put some of this money towards emergency savings or add to your emergency savings. You should aim to save the equivalent of 3 months of your expenses in emergency savings. 

• Invest for the future – speak to a financial advisor about investing for the future. Higher interest rates mean the cost of borrowing is higher. However, it also means you will earn more interest on saving and investments.

Interest earned on positive balances means you have the opportunity to earn additional income in the form of regular interest income. If you haven’t already started on the investment journey, it’s a good time to start.  Speak to an advisor or your bank, do your research and empower yourself with information and knowledge about investing.  Learn about the different types of investment vehicles and look to match your investment goal with an appropriate product. 

We strongly advice consumers to consult financial institutions or financial advisors on how they can better manage their money. Banks also have services and educational content on how consumers can better manage their money. Contact your bank to see if they are able to assist.