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The year has come to a close and, surprise, your employer has a nice end-of-year bonus for you. As you imagine this extra money coming your way, you're probably dreaming of ways you can spend it. But before you go on a spending spree with your newfound money, let's look at how you can responsibly save and spend your bonus.

Pay off Debt

While it might not sound as fun as other things, paying off debt is a safe bet if you're looking to be responsible with your end-of-year bonus and reach financial wellness. If you're in debt repayment mode, then contributing your entire bonus will have the maximum impact — and watching your debt balance drop can be a very satisfying feeling.

But let's be honest, you might want to save some of the funds for yourself. And that's okay! You should still consider putting a portion of your bonus toward debt, though, as paying off debt is a guaranteed return on your investment. It can also help you save money on interest and get you out of debt faster. To start, focus on your highest interest debt first which will save you money in the long run.


Wondering what else to do with your end-of-year bonus? Before getting too far, ask yourself if you have an emergency fund with three to six months' worth of expenses. If you don't, contributing money to that is a must. Emergencies are inevitable and you want to make sure you are covered. The last thing you want is to be unprepared and suddenly in debt.

Having a savings cushion can help you avoid financial disasters so that you can keep moving along the path to financial wellness and feel great that you'll be prepared for whatever may come your way.


Once you've got your savings cushion padded, you should also consider supercharging your end-of-year bonus by investing.

Investing may sound scary but historically, it's the best way to get a return on your money. Putting money in your retirement account and other investment vehicles can help you build wealth. By using your end-of-year bonus toward investing, you can jump-start your finances and help you be more prepared for your future.

Treat Yourself

You've been responsible with your bonus but you also want to have some fun with it, right? You've worked hard, that's why you're getting the bonus, so you should enjoy some of it.

Consider spending 10 percent of your bonus on yourself. What is something you've always wanted to do but haven't done because it's out of your budget?

You can also spend it on something that will help you personally or professionally — like a class, workshop, or retreat. Whatever it is that you've been itching to do or try, treat yourself a little and to celebrate the great financial progress you've made.

Bottom Line

If you've received an end-of-year bonus, you can still have some fun with it — just remember it's all about balance. By funding your present and future financial goals, you can spend the rest on the things you love guilt-free.

This information and recommendations contained herein is compiled from sources deemed reliable, but is not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or is offering any tax, accounting, or legal advice.

By selecting any external link on, you will leave the KeyBank website and jump to an unaffiliated third party website that may offer a different privacy policy and level of security. The third party is responsible for website content and system availability. KeyBank does not offer, endorse, recommend, or guarantee any product or service available on that entity's website.

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