SUMMARY: We heard your feedback, so we decided to get a little more detailed! Our previous post was so popular and generated a lot of questions. We're going to do our best to answer them! Getting your yearly bonus is a great event to look forward to. But when you get a lump sum of money like your yearly bonus, you'll need to decide what to do with it. We’ve got some great ideas to help put your extra funds to use.
Start a Savings Account
Whether you plan to buy a house one day or you're saving up for a new car, it's challenging to reach your financial goals if you don't have some money saved up in an account you don't regularly access. That's why it's important to have a savings account. If you haven't already, consider using your extra bonus to start a savings account. We offer several types of savings accounts you can start for you or your family members, including a Share Savings, Club Savings account and Teen Savings account.
Open a Certificate of Deposit (CD)
If you want to save for a large purchase and grow your money at a rate that's higher than savings deposits, then consider using your bonus to open up a certificate of deposit (CD). CDs are some of the most predictable and safest accounts to invest your money. You can also take advantage of different terms, we offer several great options!
Save for a Rainy Day
Having an emergency fund is essential to handle unexpected situations, such as a car insurance deductible or a co- payment for an emergency room visit. That's why using your yearly bonus for an emergency fund is a great idea. Consider using your bonus to save at least three to six months worth of your expenses. This emergency fund also comes in handy if you lose your job and need to pay bills. We have some handy savings calculators you can use to help make a savings plan, but you can always contact us for more help!
Save for Retirement
Saving for retirement is important to ensure you can live the lifestyle you want when you get older, and your bonus is a great lump sum of money you can use to start saving for your retirement.
Consider contributing up to the employer's match for your 401k is to increase your retirement savings.IRAs like the one we offer are also ideal ways to save for retirement. You can even lower your tax liability when you contribute to these retirement plans, so consider using your bonus to open up a Roth IRA or IRA. Learn more about your retirement savings and how to plan ahead with our tools and resources. If you want a more hands-on approach, we're happy to help get you on the right path.
Pay Off Debt
If you're still making payments on lingering debt, such as credit card debt, student loan debt or unpaid taxes, consider using your yearly bonus to pay some or all of these debts. The longer you hold on to debt, the more interest you'll pay. This means you'll also pay more than the original amount you borrowed. You can also consider transferring any remaining high-rate balances to a lower-rate credit card.
When you get a lump sum bonus, it's important to make wise moves with your money if you want to get the most out of it. By using these tips, you can make smart money moves with the extra money coming into your account so you can reach your financial goals. TDECU is here to help make your money work smarter and to set you up for financial success. Don't put off your future, contact us today!