SALT LAKE CITY — When you receive a holiday bonus or monetary gift, the temptation to splurge can be overwhelming. However, financial experts suggest treating this "free money" as an opportunity to improve your overall financial health.
"When you get that bonus or tax return, it's so easy to say free money," said Dave Nellis with America First Credit Union.
The holidays are a time when many people receive monetary gifts or holiday bonuses from employers or family members. While the urge to spend it on something from your wish list is natural, Nellis recommends stepping on the holiday brakes.
"That's part of your budget as well, and so treat that bonus, treat that tax return the same as you would a regular paycheck as regular income and set some aside for you," Nellis said. "You earned the bonus, well, reward yourself with something fun, but also reward yourself with some savings."
According to Lifehacker.com, using the 50/30/20 rule is a great guide to follow when you come into some cash. The rule suggests using 50% to pay off debt, putting 30% away in savings, and keeping 20% for yourself to have some fun.
To put this rule into a real-world example with a $1,000 bonus: apply $500 to reduce debt, use $200 for yourself as a treat, and put $300 into savings.
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