When the bonus is truly an additional income (that is, you did not spend it before receiving it) it represents a great opportunity to achieve a goal, turn around our financial situation or accelerate the construction of our long-term assets.
Although there are many ways to use it, for me these are the three great smart alternatives, which I will explain in detail soon:
1. Achieve a goal
One of the most rewarding ways to use extra money is precisely to achieve something we have wanted for a long time, or for things that enrich our quality of life.
It can be a trip, a recreational activity with the family or also the purchase of a high-value good.
In particular, I have sometimes allocated my bonus towards a trip I am planning with my wife. It is an activity that we love to do (we would like to have the opportunity to travel more, but you do what you can). The experience of getting to know a new place, people with other ways of being and thinking, trying different foods, always gives us a new perspective on life. It enriches us a lot.
2. Significantly improve your financial health
In the previous column I mentioned that for some years I used part of my bonus to make principal payments on my mortgage loan. That was part of a strategy that allowed me to pay it off in less than five years, with considerable interest savings.
Other people I have been fortunate enough to help have used it to completely turn around their financial situation.
For example: if you have consumer debts (credit cards, personal or payroll loans), the bonus can help you take significant steps in your strategy to get out of them.
If you’re just building your emergency fund, the bonus can give you the boost you need to complete it (or get closer to your goal).
3. Invest it to achieve your financial freedom faster
It’s not a secret: wealth is built with long-term savings and investment. With perseverance, consistency, discipline.
On other occasions I have explained the concept of compound interest and demonstrated how time is the most important variable. I have shown how people who start early, with little money, typically achieve more than those who start years later, with significantly higher contributions. In this sense, time is money.
Over the years, part of my bonus has also gone toward my retirement plan. To build my future and my freedom.
Although one must be careful. Nowadays, on social networks, many very high-cost retirement plans are promoted with half-truths (or disguised lies). The benefits of deductibility are emphasized, but projections are also made with returns much higher than those they will generate after all commissions and costs. In the case of those that are marketed as guaranteed insurance, agents use projections with inflation: the amount you are going to receive in the future seems very large, but that is the pure result of projecting inflation. In real terms your profit is close to zero. Ask them to do the run with “zero” inflation so you can realize it.
Be very careful where you put your money, especially in the long term. Make smart investment decisions.
Although it is important to take advantage of the tax benefits and incentives to which you are entitled, they often do not offset the costs inherent to these products. In addition, many times in practice, the SAT creates obstacles, especially if the amount of your refund is high.
Always learn to evaluate what they sell you, to make intelligent and appropriate decisions. That is what financial culture and the bases that I try to explain to you in this space are for.
In summary
The bonus represents an opportunity to reflect on your life and your financial health, to make decisions that bring you closer to what is most important to you. That is why it is important to use it well, consciously, intentionally and strategically.
So, I invite you to take some time to evaluate your priorities. What do you want that money to do for you? What do you need? How can you use it to improve your quality of life today or in the future?
If you already spent it before on the “Buen Fin” or in another way, serve this as an invitation so that the following year becomes an opportunity to add more value to your life.
