While many of us have been conditioned to expect a regular bonus from work or some other gift of money, either from living relatives or through an estate, there is still a thrill when circumstances drop a large sum of money into your life.
In 2024, the average work bonus was roughly 2.8 percent of the worker's annual salary, across all industries. What would you do with yours? While there's nothing wrong with having a little fun, you may have some goals that need attention, too.1
Let’s examine the choices for your windfall.
Thinking About the Future
- Max out your Contributions — Reviewing your contributions to your personal or workplace retirement accounts is one way to prepare for the future. If you haven't reached contribution maximums for the year, why not take advantage of tax-saving benefits and give your future-self something to thank you for?
- Invest More — Even if your retirement accounts are maxed out, you may still have opportunities to invest your bonus cash. We can help discuss the purpose for your savings, and options to invest.
- Build-up your Emergency Fund — If you don't have one, now's a great time to start it. If you do have one, it might be time to review. A good rule of thumb is to have at least 3-6 months of expenses set aside in a high-yield savings account for a 'rainy day.'
Debt
- Consider Paying Debt Down or Off — Using your windfall to pay off high-interest debt can be extremely impactful for your mental and financial well-being. The average interest rate for credit cards is somewhere around 20 percent.2 Debt can cast a long shadow, so it's always nice to clear the way for sunshine ahead.
Family
- Fund College Plans — If saving for your child's college education is a top priority, you may consider opening and contributing to a 529 college savings plan.
- Save for Future Flexibility — Remember that the future for your loved ones goes well beyond immediate concerns. Hope to contribute to your kid's wedding fund, or support an aging parent? The more you put away now, the more impactful the support you can provide to your family.
Saving for Big Purchases
You might have a big purchase in mind. We can discuss any of them, whether they are listed here or not.
- Down Payment on a Home — Many people's goals include home ownership. If you want to buy a home or are already well on that path, your bonus could propel you even closer to having a place to call your own.
- Saving for Experiences— You know you have one in mind! What's that dream location that has been on your bucket list for a while to visit? Or perhaps you've always wanted to see your favorite artist in concert? Whatever the goal, any amount of extra money could give you a nice head start towards making some fantastic memories.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2025 FMG Suite
Sources and Footnotes
- Northwestern Mutual, February 14, 2025
- Bankrate, August 5, 2025
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