Received a year-end bonus? This is how to resist the urge to splurge all season long.
“You’re getting a bonus.”
Are there any sweeter words to hear at the end of a long, productive year? If you’re one of the lucky ones to receive a year-end bonus and you’re torn between living your best life this silly season or saving for a smoother start to the new year, consider the following before you tap or insert.
Settle debts
Outstanding balances aren’t fun — and neither are interest rates that come with buying on credit. It’s always a good idea to use any extra money in your account to start paying off your debts, and many experts suggest starting with the smallest amount, as well as those with the highest interest rate.
Whether it’s a credit card that came to your rescue in a difficult time, a store card that has seen better days or a car loan that’s almost paid off, settling your debts is a way to create balance in your budget.
“First, flatten your credit card. Unsecured debt makes your bank richer than your investments ever will. Then, build yourself a buffer. It’s boring but vital,” says Bryan Nicol, a Cape Town-based lifestyle financial planner.
Get ahead
“Next, think ahead: annual car service, school fees and so on. If all that’s covered, only then should you look at investing for the future. It’s all about priorities,” says Bryan.
Upcoming expenses don’t care about the number of debts you’ve accumulated or the dreams you have of a seaside holiday —they still demand payment. Put money aside for the expenses that you’d need to cover in the near future.
Not only will this free up some of your budget in the new year, but it’ll also help ease any financial anxiety you may have about making your salary stretch. Plus, some financial commitments offer a discount if you pay the annual amount upfront at the start of the year (rather than in monthly instalments), so enquire about this.
Keep it safe by saving
Can you remember how many times you’ve told yourself you’re unable to save money because you don’t actually have any money to save? Well, now’s your chance to change the narrative. You do have extra money in your account, so you are able to make better choices.
Assess your current financial situation — existing credit as well as upcoming expenses — and figure out what your priorities are and what your financial goals are.
“If you’re going to need the money within a year, keep it boring. A money market account pays around 7% with almost zero drama. Banks offer them and so do investment platforms (search “money market unit trust” for options). It’s not exactly sexy, but neither is trying to sell your TV in March because your high-risk crypto fund ‘went on a journey’,” says Bryan.
If you don’t have an emergency fund, it’s time to start one. And if that side hustle is calling for your attention, it may be time to use your bonus to start planning its start-up.
Lump sum or long-run?
If your bonus is a considerable amount, you may want to look into investing it all with the hopes of your money growing substantially in a few years. “Long-term (10+ years) means you’re fighting inflation… and inflation is stealthy. You’ll need equities (shares) to beat it, and these should be mostly offshore. That comes with volatility, yes, but also real growth,” says Bryan.
How do you do it? “Low-cost unit trusts or ETFs [exchange-traded funds] are your go-to here. You can think of them like the slow cooker of investing — set it, forget it, and don’t fiddle. Let compounding do the work… Your job is to not get in the way,” he explains.
The trick with letting your money work for you is to trust the process — but, first, make good, informed decisions on where you’ll plant your bonus. If the options are overwhelming or you’re not sure which would give you the best return, speak to a qualified financial advisor who would be able to separate any dodgy deals from those that’ll work in your favour.
Is there room for a spoil? ,
Guilt-free spoiling starts with a plan. Look at what you usually spend over the festive season… The actual numbers, not the version you tell yourself,” Bryan advises. Think back to previous years and how you spent your money – and reduce any spending you regretted in January or those that didn’t bring you joy (or more money).
“Then, whatever’s left is your ‘treat yourself’ fund. Spend it with zero guilt because the boring-but-important stuff is sorted,” says Bryan.
Whether you’re trying to recover from a wild year of spending or starting 2026 off with a positive bank balance, consider how you’ll spend your bonus before it becomes a thing of the past.
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Words: Shani Tsai
Photography: Getty images, Pexels
