How to make your holiday bonus work for you

It may be tempting to use that money for a vacation or some new toys, but bust On Your Side shows you how to make the most with your money.
Published: Dec. 29, 2022 at 2:04 PM MST
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PHOENIX (3TV/CBS 5) - A lot of employees expect a holiday or year-end bonus, but a new survey shows some companies are cutting back on the extra cash.

This year, according to the Challenger Holiday Survey, 27% percent of employers aren’t awarding bonuses, up from 23% last year. For most companies that are doling out bonuses, the amount is remaining flat.

If you are getting a holiday bonus, you want to maximize its potential, but how you make the extra money work for you depends on where you are in your finances, according to finance expert and author Candy Valentino.

“If you have bad debt, debt that you’re paying on, a car loan, a boat loan, credit card debt, anything that’s a depreciating asset like that, you’ve got to get rid of that because you can’t out-invest bad debt. It’s the greatest destroyer of your wealth,” Valentino said. “So if you’re getting a bonus, the very first thing you should be doing is paying down that bad debt so you can get yourself in a situation where you can take advantage of the economy that’s coming up and really invest.”

When you’re ready to invest, make sure you are maximizing retirement savings accounts and focusing on the long game.

“We’ve got to be having our money buy assets to make more money, so if you don’t have any bad debt then maybe take a look at getting a Roth IRA,” Valentino said. “Short term gains are always going to have short term risk, so if you’re not super savvy with your finances, you just going out and trying to pick a stock and hoping for the best probably isn’t the best financial strategy that you want to have.”

Keep in mind holiday and year-end bonuses are taxable income.