Did you know that 23% of employed Americans expect to receive a Christmas bonus? According to the Social Security Administration, the average bonus is $1900.
Count your blessings if your employer provides more for Christmas than a spiral-cut ham. Even though a Christmas bonus might be exhilarating, you should think twice before spending it all.
According to Sharon Davis-Edwards, President and CEO of S.J. Edwards, Inc., a New York-based financial services and employee benefits firm, the average bonus is $1900 and it’s quite tempting to spend it and splurge. “A bonus can improve your financial situation and is quite fulfilling. Use it wisely,” she says.
Here are a Sharon Edwards’ Top 5 Christmas Bonus Tips
Make this a top priority, especially if your loan has a high-interest rate. Paying down debt will also improve your credit score. Always remember, the higher your credit score, the lower your interest rates should be which could save you a substantial amount of money over time.
Increase Your Emergency Savings
Now is a perfect time to replenish your emergency fund if you’re out of debt but aren’t quite ready to start investing. The unexpected always occurs so fill up your financial safety net now.
Boost Your 401k (k)
A great way to multiply your Christmas bonus money is to put that bonus into your employer-sponsored retirement plan like a 401(k). If you consistently do so, your Christmas bonuses will grow into a sizable retirement fund. And the company match isn’t even included in that!
Start Planning Your Next Vacation
It’s never too early to begin saving. Get a head start on next year by putting your holiday check in a straightforward, one-and-done vacation fund. When everyone else is still recuperating from Christmas, you can generally get some great deals on flights and hotels
Invest In an Education Savings Plan
Saving money for your children’s college education should be a top priority because this expenditure has been increasing every year. A 529 education savings plan can be a great way to save for college because withdrawals made for approved educational costs are tax-free and earnings increase tax-free.
Did you know?
How many workers actually receive a holiday bonus?*
- 23% of employed Americans expect to receive a holiday bonus this season and 12% expect a holiday pay raise.
- 29% of men expect a holiday bonus but only 22% of women expect one.
- The average American’s salary for 2022 was $52,869, according to the Social Security Administration.
- The average payout for bonus recipients is $1,900.
- Those receiving a holiday bonus can expect to receive around 5% of their salary in pay.
*These statistics are sourced from the Society of Human Resources, Bankrate.com, and American Express surveys.