Be your own Secret Santa this year
Canada Life - Dec 21, 2022
Use your year-end bonus to give yourself the gifts everyone wants – and needs. Smart ways to invest your year-end bonus – in yourself. This article has three easy ideas to help you improve your financial plan
Did you get a bonus this year? Maybe it was a surprise or maybe you were expecting it, but it’s always great to be recognized for your hard work and see a bit more money on your pay stub!
The big question - what should you do with your bonus?
Here are three ways to use that year-end bonus that can make that bonus even more valuable.
Idea #1: Slay the debt monster
The debt monster approaches, armed with high-interest rates, reaching out to take money from your pocket – you need to pay it. It presents itself in many forms (for example, student-loan debt, credit-card debt, payday loans or car payments). It haunts you as you feed it monthly payments in the form of your hard-earned cash. High-interest rates may mean your payments barely make a dent in the principal.
So – if you can’t fully pay off the monster, why not give yourself the gift of fighting back with a lump-sum payment to help lower its negative impact and get you closer to living debt-free?
Idea #2: Wait for it.
You’ll have to wait to feel the full impact of this one.
A registered retirement savings plan (RRSP) steps up your financial game. You know the power of compound interest. And contributing to an RRSP gives you a benefit you don’t need to wait for - you’ll receive a tax receipt for the contribution amount which can offset your income when filing your annual income taxes. So, it’s helpful now and later as you pay into your savings, plan for your future, and you get an immediate tax break. Doubling dipping!
However much or little you decide to invest, future you will be grateful to present you.
Idea #3: Fuel your goals
Whether your goals are necessities - like creating an emergency fund for things like a car and home repairs, or extras - like taking a dream vacation one day, a tax-free savings account (TFSA) can help. It’s great for short-term savings goals and you contribute after tax dollars, which means there aren’t tax consequences for taking the cash out when you’ve reached your goal.
Curious about the difference between a TFSA and an RRSP? You can read more about it here.
Do yourself a favour this year and contact me. I can help you do something nice for your finances. Whether you decide to go with one or a combination of the above ideas, you’ll make the most of your year-end bonus.