Are you expecting a year-end bonus this year? Or maybe you know Grandma always gives cash for Christmas? Either way, you’ve got better things to do with that extra money than just blowing it all.

Whenever you get extra cash, think about how it could help you get closer to your financial goals. This doesn’t necessarily mean you can’t enjoy some of that unexpected cash windfall. But you should at least think about how part of the bonus money could further your financial future.

Need some ideas? Here are some financial goals you might be working towards and how you can use that cash bonus to get even closer.

Getting out of Debt

If your goal is getting out of debt, you’ve got some obvious options for using that holiday bonus, including:

  • Pay down your smallest debt. If your holiday bonus is big enough to cover one or two of your smaller debts, paying them off entirely can feel great. This option can give you good motivation to keep moving forward with clearing out all of your debt. Plus, it can eliminate a couple of monthly payments, which frees up more cash to put towards more significant balances.
  • Pay down your highest-interest debt. Want to make an impact on your ability to pay off debt? Pay down your highest-interest debt first in a debt avalanche. Even if you can’t pay off the entire debt, paying down the debt with the highest interest rate will ultimately save you more money over the long run. Keep hammering away at that balance in the new year and make some serious headway.

Read more: How a Debt Snowball Can Reduce and Then Eliminate Your Debt

Boosting Your Credit Score

Even if you’re not in loads of debt, you may have a lower credit score than you’d like. If you want to boost your credit score, take one of these steps:

  • Pay down credit card balances. Since your debt-to-credit ratio is one of the most significant pieces of your credit score, paying down credit card balances is a quick way to boost your score. For the most considerable boost, pay down the credit card that’s closest to its credit limit.
  • Pay bills ahead of time. Paying bills “on time, every time” is essential to having a great credit score. If you struggle in this area, consider using your bonus to pay a couple of bills ahead. Continue making payments on time after this point, but try to stay a month early. If you run into a tight month or run late on paying bills, you won’t get hit with a late fee or a credit score ding.
  • Get on a month-ahead budget. One popular budgeting method from You Need a Budget entails having an entire month’s worth of expenses in your checking account. You’re constantly living on the last month’s income. Even if your holiday bonus doesn’t equal an entire month’s pay, you can use it to start this smart budgeting method. The month-ahead budget makes it nearly impossible to miss a bill, so your credit score stays high.

Related: 11 Simple Ways to Improve Your Credit Score Today

Increasing Your Savings

Looking to boost your savings rate or tuck money away for a particular goal? Try one of these options:

  • Save for something specific. Have something in mind that you’re actively saving to buy? Your holiday bonus or Christmas cash can be a big boost to this fund. Whether you’re saving for a house, a new car, or a vacation, putting your bonus towards something big is always a good option.
  • Put money into your emergency fund. If you’re actively working on getting out of debt, you’ll still want a thousand dollars or more in a savings account. If you’re debt-free or close to it, you’ll want to aim for having three to six months’ worth of expenses in a savings account. Just in case the worst happens. Put your cash towards starting or building up this fund, and you can’t go wrong. Here’s an article with our tips on building an emergency fund.
  • Start a new, generic savings account. If you’ve not been great at saving in the past, consider opening a free savings account that you can continue contributing to throughout the following year. Sometimes having a bit already saved can be motivation enough to sock away even more money. Here’s our list of the best online savings accounts with high interest.

Saving for Retirement

If your main financial focus is investing for retirement, try one of these options with your bonus:

  • Start an IRA. Are you already contributing heavily to your company’s 401(k) plan? Use your holiday bonus to start a traditional or Roth IRA, depending on your financial situation.
  • Contribute to your Health Savings Account. If you’re already maxing out on retirement savings, consider adding to a Health Savings Account (if you’re eligible). Since this money can also grow tax-free indefinitely, it can serve as bonus retirement savings and can be especially useful if you’re within a few years of retirement.
  • Try a taxable investment account. Want to try your hand at making investment decisions when you have more choices? Consider opening a taxable investment account using a tool like Betterment. You don’t want to put too much money into a taxable account until you’re maxing out your tax-advantaged options. But a bonus can be an excellent start to this type of investment.

Furthering Your Career

Got some serious career goals for 2022? Use your holiday bonus to move toward them.

  • Remodel your home office. Do you work from home or often bring work home for evenings and weekends? Having an appropriate space for working can help you be more productive. Consider using your bonus for a home office remodel. Don’t go overboard, but focus on basics like the technology you need (a scanner, printer, etc.) and a comfortable, ergonomic, quiet workspace.
  • Take a course. Boosting your skills and knowledge is always a great way to further your career. Try using your bonus to take a college course or an online class designed to enhance your current skillset or add entirely new skills to your repertoire.
  • Pay for a conference, membership, or subscription. Networking is always a great way to further your career, and you can do that at meetings and conventions. Check out some great ones in your area. Or pay for a subscription to a professional league or a membership to your local Chamber of Commerce. These are all great ways to meet new people who can help you in your career or be valuable contacts in the future.
  • Upgrade your work wardrobe. If you’re looking to move up in your career, you may need to look more professional to do so. Splurge on a new suit or a professional capsule wardrobe that will really wow the boss, colleagues, and clients when you get back to work after the holidays.

Securing Your Family

Maybe you’ve been putting off a few things that are necessary for your family’s future security. Consider these options for your holiday cash:

  • Pay a lawyer to draw up a will. If you don’t already have a will, that’s a must-have. Get with a local lawyer to draw one up, especially if you have children who need to be cared for if something happens to you. It’s never fun to think about dying, but creating your will is absolutely a must-do.
  • Get liability insurance. An umbrella liability insurance policy can cover gaps left by your homeowner’s and car insurance. These policies aren’t necessary for everyone but can offer excellent protection for people who need them. Consider putting a significant payment towards liability insurance premiums with your cash bonus.
  • Buy a term life insurance policy. Term life insurance is the smart option for most consumers, especially younger people who will likely only need insurance for a couple of decades. Do your research on the type of policy that will work best for your particular needs, and then pay a year’s premiums in advance with your bonus. Learn more about this in our Complete Guide to Life Insurance.
  • Increase the value of your home. If you’re like many homeowners, your home is your biggest asset. You can get some personal satisfaction and make a wise financial choice by boosting your home’s value. Kitchen and bathroom renovations typically give the best bang for your buck, but you’ll first want to tackle any outstanding maintenance issues that could cause your home’s value to tank if not fixed.

Starting Some New Year’s Resolutions

Maybe it’s worthwhile for you to spend that money on goals in other areas of your life, such as fitness or intellectual development. If you’ve got some non-financial New Year’s Resolutions this year, don’t be afraid to advance them with your bonus. Need some ideas?

  • Buy a gym membership or home gym equipment. Want to get in better shape this year? Use your bonus to prepay for a gym membership. You’re more likely to go if you’ve already paid for it! Or buy some essential equipment to set up your gym at home, making getting in shape even more convenient.
  • Purchase an e-reader and several books on your to-read list. If you’d prefer to strengthen your mind this year, consider buying a slim e-reader. Not everyone loves them, but they’re a great option to keep in your purse or briefcase for those brief moments you get to read throughout the day.
  • Get a subscription to a magazine or newspaper that interests you. Again, you can boost your personal intellectual development with some solid reading. Consider using part of your bonus for an interesting magazine or newspaper. If nothing else, this will help you be more interesting at cocktail parties this year.

Boosting Your Motivation

Sometimes it’s okay to splurge. If you’ve used your income wisely all year–living frugally and paying off debt or investing–now might be the best time to splurge. This can boost your motivation to keep making great financial choices through 2022. Here are some splurge ideas:

  • Develop a new hobby. Having hobbies is a great way to decrease your stress level and keep you interested in life when work gets tedious, and financial progress seems slow. Use your bonus to buy supplies for a new hobby or find a local class you can take to develop a new skill to hone throughout the coming year.
  • Redecorate your home. If you’re bored with your old bedspread and curtains, take some of your bonus to redecorate. New paint and linens aren’t that expensive and can be a great way to start the year with a fresh outlook.
  • Go out on the town. For smaller bonuses, or if you want to use part of it, take your spouse or family out for a nice dinner. To make the most of it, splurge on a restaurant you wouldn’t usually pick. Try something new, and make it a memorable experience.
  • Take a vacation. One of the best ways to boost your overall happiness is through experiences rather than “stuff.” Whether you have a $1,000 bonus or a $10,000 bonus, consider spending some of it on vacation. Plan a summertime excursion, weeklong cruise, or take a weekend-long staycation to get to know your hometown.
  • Relax. Maybe that bonus came after a stressful work year. Spending it on a spa day or a night out with friends can help you relax. Decreasing your stress level will only serve to make you more focused and productive after the holiday season.

Decide what’s best for you and your family, and enjoy whatever you decide to do with the money!

Will you be getting a bonus this year? How do you plan to utilize it?


  • Abby Hayes

    Abby is a freelance journalist who writes on everything from personal finance to health and wellness. She spends her spare time bargain hunting and meal planning for her family of three. She has a B.A. in English Literature from Indiana University Purdue University Indianapolis, and lives with her husband and children in Indianapolis.