Finding the balance between saving your bonus vs spending it

For many of us, December is an exciting end to the year, as we take some time off to spend with family and friends while enjoying the holiday season.

December is also a month that tests our ultimate budgeting skills, as not only do we have everyday expenses, but we need to buy presents, plan for Christmas and new year’s celebrations, pay for holiday trips, and still try to save!

Despite the great expense, most of us are thrilled at the thought of receiving our yearly bonus, which provides some financial freedom. Being financially smart and making sound financial decisions during this time is essential.

Here are some guidelines on what to do and what not to do:

What to do:

  • Retirement Annuity: Maximise your tax-deductible benefit. Being able to effectively invest with pre-tax money is an important benefit and it is worth directing a portion of your bonus to boost your retirement savings. You have up to 27.5% of your income or R350 000.00 pa tax-deductible contribution benefit. bear in mind that you have until the end of February 2022 to make use of this benefit.

  • Pay off debt: If you have any debt; ie, credit card, high-interest debt, home loan, or a student loan, use some of your bonus to reduce your overall debt.

  • Boost emergency fund: It is vital to have a backup cash lump sum for a rainy day. Have an expensive vet bill, or need a set of new car tires? Boost your emergency fund by investing some of your bonus.

  • Invest: If you do not yet have an investment, take the opportunity to start. A small lump sum is all it takes to make a life-changing decision for the future.

  • Prepare for school fees: Tuition, school uniforms, books, residence, sport, stationery, and school uniforms all require available cash. Be smart and set aside some of your Bonus to make it financially manageable when the school year starts.

  • Tax-free Investment: R36 000.00 per year can be invested in a Tax-free policy. Be tax savvy and invest a part of your Bonus towards an investment that offers 100% tax-benefit.

What not to do:

  • Spending urge: Don’t feel like you need to spend your bonus now that you have the money. It can be challenging to say no when you have a lot more cash available. And thus, it is essential to stick to your budget, especially during December.

  • Counting your chickens before they hatch: Never spend what you don’t have. Sometimes we get ahead of ourselves and spend money we presume we will receive. Depending on the terms of your employment contract, receiving a bonus may not be guaranteed. Wait until your bonus lump sum is in your bank account!

  • Upcoming commitments: Receiving a salary and bonus in one month can make one feel untouchable. The harsh reality is that January always approaches fast and requires an entire month of regular expenses. For most this also requires some extra expenses. Make sure you do not put your head in the sand and avoid thinking about January’s financial commitments!

  • More debt: Avoid using your bonus to rack up even more debt. Make sure you consider all the facts when you decide to make debt, as you might be putting yourself under additional pressure.

  • Planless check account security: After receiving your bonus, be careful to leave it in your check account without a proper plan. You will be surprised how easy you wake up in three months and realise your entire bonus was spent on clothes, take-away foods, and parking. Make sure you have a plan for your bonus before you receive it; this will ensure that you spend according to a plan.

If you require advice on being financially smart with your Bonus, contact our brokers at PBA for help and advice.

Contact us:

Phone: 011 803 9686

Email: or

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