More than half, or 63 percent, of companies . And the extra cash could be significant: The average anticipated holiday bonus is $1,797, according to Accounting Principals.
While it may be tempting to blow all that on something fun, excessive spending isn't the smartest way to handle your bonus. Here are eight options that will be better in the long run and could feel good today, too:
1. Beef up your 401(k)
Ideally you're already putting money into your retirement account if you have the option, but, if possible, you'll also want to get in the habit of increasing your contributions consistently. A bonus is a great opportunity to do so.
2. Invest in another retirement savings account
Enrolling in your employer's 401(k) plan is a good start, but experts say that it may not provide enough to fund your future. It's smart to consider too, such as a Roth IRA, traditional IRA and/or .
Direct your extra money towards one of those options. Bonus points if you set up automatic contributions so your account continues to grow over time.
3. Pay off any lingering debt
If you have , car loans or , a bonus can be a great way to get out of the red more quickly. Especially if the interest rate on your debt is high, getting rid of your loans as fast as possible will help you avoid paying thousands of dollars of interest.
4. Build an emergency fund
Experts agree that it's smart to have three-to-six months' worth of , or even more, to help protect you in case of disaster. Use your holiday bonus to get closer to that goal.
5. Open a 529 savings plan
If you have kids, you may want to consider opening a to start putting money away for their education. College costs are already out of control and are only .
A 529 plan allows a parent to contribute up to $14,000 a year — $28,000 for a couple — for each of their children's college educations. Use your holiday bonus to make your first contribution, or add to an existing plan.
6. Chip away at larger savings goals
Chances are, big purchases are in your future, such as a home, car, grad school or vacation. Use the extra money to get a head start on saving. Months or years from now, you'll be glad you did.
7. Consider other investment vehicles
Investing is one of the most effective ways to build wealth, and an end-of-year bonus is a good opportunity to jump in. Look into automated investing services known as , or low-cost index funds, which investing legend Warren Buffett and billionaire Mark Cuban recommend.
8. Invest in yourself
One of the best investments you can make is in yourself. Take your bonus and use it to further your education by enrolling in a course, attending a business conference or investing in books.
Additionally, . Consider making room in your budget for a gym membership, exercise classes or a fitness-magazine subscription. Taking care of your future isn't the easiest thing to do, but your future self will thank you.
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Video by Jonathan Fazio
