Christmas Bonus: 6 Smart Ways to Make It Count

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If your company gives you more than a spiral-cut ham for Christmas, count your blessings.

A Christmas bonus can equal big fun, but that doesn’t mean you have to splurge on a 60” TV or an in-ground swimming pool (Clark Griswold, anyone?).

Instead of racking up another household gadget this season, do something that actually helps your family’s bottom line. Here are six smart ways to save or spend your year-end bonus and still have fun.

If You Spend It:

1. Knock Out Debts.

This isn’t the most glamorous way to spend your bonus, we know, but it’s one of the smartest. If you have outstanding debt, use your extra holiday income to get rid of it faster.

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Think of it this way: The less you pay in interest now, the more money you save in the long run. And the more money you save, the more you can spend on fun activities later, like pro-football season tickets, beachside villas or a paid-for hot tub.

Doesn’t that sound like the life?

2. Get Outta Town.

Raise your hand if you don’t get enough stuff for Christmas. Thought so. Most of us get way more than we want or need during the holidays, so why rush out and blow your bonus check on more of it? Studies show that experiences mean more to us anyway.

So if you and your spouse have been penny-pinching all year, surprise your sweetie with a post-holiday getaway. Simply take the kids to Grandma’s and book a quiet B&B a few hours away. Improving your marriage is always a good investment.

3. Give It Away.

Okay, don’t give all of it away. First, treat your family to a big meal at their favorite restaurant. Enjoy your fill of appetizers, salads and main dishes.

Then, when dessert comes (because everyone is ordering dessert!), surprise your kids with the why behind this delicious dinner—your Christmas bonus.

As you’re savoring your hot fudge sundaes, ask your kids for their ideas on how to give the rest of the money away. They’ll learn a valuable lesson in sharing, your family will enjoy a special evening together, and your money will go toward blessing others. What could be more rewarding?

Related: Plan how much you need to save for retirement by determining your Retire Inspired Quotient (R:IQ) for free.

If You Save It:

4. Multiply Your Retirement.

Before you hit the snooze button, hear us out. This might be the world’s easiest way to multiply your money.

Here’s the equation: Take your Christmas bonus then add your company match and multiply it by however many years until you retire. That equals lots of cruises and golf games.

Need the hard numbers? If you put a $2,000 bonus in your retirement account and leave it there for 20 years, it could turn into nearly $20,000! Do that every year, and your small bonus will turn into a proper nest egg. And that doesn’t even include the company match!

Related: Do These 3 Things to Optimize Your Retirement Investments

5. Jump-Start Your Vacation.

Summer vacation is months away, but you always start saving too late. This year, get a head start by stashing your holiday check in a simple one-and-done vacation fund.

And since you’ve already saved, why not book the whole vacation now too? You can usually score some killer deals on flights, hotel rooms and rental cars by shopping for summer while everyone else is still recovering from Christmas.

6. Boost Your Emergency Fund.

Here’s another rewarding reason to save. If you’re out of debt but not quite ready to start a Roth IRA (or if you accidentally dipped into your rainy-day savings to buy gifts), now is a great time to restock your emergency fund.

Then if your water heater dies in a few weeks or an icicle shatters your windshield, you’re covered. The unexpected will eventually happen. So fluff up your financial cushion now and let your year-end blessing bring the added blessing of peace of mind.

The best part about this list is you don’t have to pick just one option. You can mix and match smart spending and smart saving to fit your family’s financial situation.

Just don’t do anything until you have your Christmas bonus in hand—the Jelly of the Month Club won’t help your bottom line one bit.

Need a way to keep track of all of your expenses, savings, and more? Check out our free EveryDollar budget tool!

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