WEEKLY MARKET COMMENTARY
What to Do with a Work Windfall
If you recently received a bonus from your employer, or expect one soon, it’s time to create a thoughtful plan for how you’ll use it. Everyone’s situation is different, but here are some smart ways to save or spend your extra income.
Indulge a little. Ward off frugal fatigue with a controlled splurge on something not typically in your budget. You might use 10 to 25 percent of your bonus to reward your hard work with something fun.
Invest in yourself. Perhaps you’d like to take a class to improve your skills, attend a business conference, purchase exercise equipment or a gym membership, or hire a professional or health coach.
Invest in an outside retirement savings account. You can still count contributions to a traditional or Roth IRA toward 2018 if you make them by this year’s tax deadline. To contribute the maximum amount ($5,500 under 50, $6,500 if 50 or older) to a Roth for 2018, you must have a modified adjusted gross income below $120,000 if you are single or $189,000 if you’re married and file jointly. But even if your income is too high for a Roth, you can contribute post-tax dollars to a traditional IRA, where they will grow tax-free.
Qualify for free checking. While free checking accounts are becoming rather rare, many banks waive fees with a minimum balance requirement. Using a chunk of your bonus to earn free checking may save you more than you’ll earn in a typical savings account.
Rebalance your portfolio. If investment gains or losses have thrown off your portfolio’s original allocation to different types of assets, you may want to rebalance. Or you may choose to alter proportions of various classes because your goals or situation have changed. Instead of selling holdings at a potentially inopportune time, you can introduce new money in areas you wish to expand.
Share the wealth. Researchers say people who donate bonus money to charity or spend it on others report greater happiness than those who spend it on themselves.*
We’re here to help you reap the rewards of your success and build a brighter tomorrow. Call our office to schedule time to discuss what you want to accomplish in 2019 and beyond. *https://psychology.unl.edu/can-money-buy-happiness