What To Do With A Bonus?



My boss pulled me into her office early this week and hinted that I was getting a bonus without officially telling me.  She asked about some of my accomplishments as she was writing up a justification for my bonus.  This always makes me feel a bit awkward.  Maybe it’s because I don’t like drawing up a lot of attention on myself and receiving praise always makes me bashful.  Nevertheless, I am incredibly thankful that my boss thinks enough of my work to give me a bonus.  


I know I’m not the only one that will be getting a bonus this year.  It appears that bonuses are replacing pay raises.  We have all read about flat wages and how companies are trying to keep payrolls down.


“Base salary increases are flat. We don’t see the prospect of that changing much at all in the next several years,” said Ken Abosch, who studies compensation issues for Aon Hewitt.


According to an article from the Washington Post written last year:

The decline of the raise could help explain one of the most frustrating puzzles of the America’s lumbering economic recovery: stagnant wages. Growth in workers’ average hourly earnings has been stuck at roughly 2 percent for the past five years — even after the rapid drop in unemployment and surge in hiring over the past 18 months.


According to a NY Times article written in 1987:

Cash bonus payments for blue- and white-collar workers were so spotty until 1983 that the bureau (of Labor Statistics) did not bother to gather statistics. Today, however, 40 percent of all workers covered by major union agreements have bonus provisions in their contracts, according to the bureau. Many are in the form of one-time lump-sum payments that take the place of raises.  


As you can see, bonuses before 1983 were not widely reported.  But, clearly over the last 30 years, bonuses have replaced increased wages.  


A Raise

I am fortunate to also anticipate a raise at the end of this year.  Looking at the work budget, a raise is very probable.  Unfortunately, the raise probably won’t be huge, but hopefully it will be big enough to rise above the level of inflation.  So, with that said, I don’t have to depend on the bonus to cover what would have been a raise for next year.  


My Bonus

finances-cash-bonusNow, let me caveat that the bonus that I anticipate receiving is not Wall Street-type bonus money.  If I were to guess, it’d be closer to half a paycheck-type money.  So not life-changing, but definitely a nice little extra chunk of change.  It got me thinking though: what should I do with the bonus money when it arrives?


In the past, I would use my bonus to pay off debt or apply it to my mortgage.  But, now that I am debt-free and saving over 70% of my take-home pay, I thought maybe I should let loose and spend a little.


I am a pretty simple guy and have everything that I need in life.  On top of that, I don’t really need more stuff.  Aside from material things, I am more interested in experiences and making memories these days.


Ways To Spend My Bonus

With that said, here are a few ways that I have thought about spending the money, if I don’t invest it.  The first two ways are actually material things, but trust me, I have good reasons to include them in the options.


New Laptop

bonusMy wife doesn’t spend nearly enough money on herself.  She loves her Macbook, but it’s close to seven years old and definitely has endured a lot of wear and tear over the years.  When she isn’t using it, her special needs sister is.  I have replaced the battery multiple times since it won’t hold a charge.  The trackpad has been cleaned multiple times but still has trouble.  Overall it’s been a great laptop, but ideally, I liked to upgrade her.  


I was looking at the new Macbook for her, and from everything that I have read, it appears to be a great laptop.  So for those Apple fanboys and girls out there, if you have any recommendations, feel free to share in the comments section.


Of course, since my wife edits the blog, I’m sure she’ll instantly nix this idea immediately since she’s attached to her slowly dying one.


New Cell Phone

bonusIn addition, she has an iPhone 4 (not even the 4s… just the 4), which is on its last leg.  It moves pretty slowly and since she can’t update the operating system, most of the apps freeze or simply don’t function.  She finally deleted her Snapchat app because it consistently froze the screen and caused her phone to malfunction.  First world problems, right?  But really, she doesn’t complain about her phone.  It probably frustrates me more than it does her.


While I would love to upgrade her to the newest iPhone, I can already tell you she is going to nix the idea.  BUT, if I was to upgrade myself, she would be more inclined to take my gently-used iPhone 5.  It still works great, and if the only way that I can upgrade my wife’s phone is buy giving her my hand-me-down, I might just do it.


**Update:  My wife just had a birthday and received an iPhone7 from her family.  They got her Rose Gold so that she couldn’t regift it off to me.  Happy birthday, honey!  🙂



icelandIf we decide against the aforementioned Apple products, I know I can convince my wife to go on a trip.  At the top of my list is Iceland.  In previous posts, I have expounded upon my obsession with Iceland.  Plus, direct flights through Wow Air are super cheap from here in the DC area.


Another place I would love to visit is the Galapagos Islands.  The raw beauty of the untouched wildlife and exotic animals sounds breathtaking.  On top of that, it should be warm, and I wouldn’t mind avoiding some of DC’s cold winter.  


So, I’ve shared a few different ways to spend the bonus money.  What are your thoughts?  Would you spend the money on any of these items?  Save it for a rainy day?  Or would you spend it on something else?  Share your thoughts below.

Mustard Seed Money

Welcome to the website. A mustard seed is a very small seed but astonishingly grows very large over time. My hope is that through your financial journey that your small investment in time, money and faith will grow beyond anything that you could ever imagine.


  1. I work in corporate America, and we get a bonus every year – typically two paychecks worth or so. I have a rule for myself that I spend 10% on fun (travel, new something-or-other, new clothes, etc.) and 90% on some kind of investment. What that investment is varies from year to year. Some years it was paying off debt, rebuilding my emergency fund, saving for my three kids college, or funding a large improvement to the house (new siding, new driveway). For me, that helps give me a sense of fun with the bonus while still using it to further my financial goals. I’ve been doing this for 15 years so I don’t remember where I got that rule from, but it’s what I did even when a bonus would be a few hundred dollars or less.
    Liz@ChiefMomOfficer recently posted…How Your Emergency Plan can Save YouMy Profile

    • Thanks for sharing Liz your perspective. I like hearing right off the top that you “pay” yourself for something that you want.

      It definitely sounds like you have an awesome plan as you’ve been doing it for awhile.

      Thanks for sharing!!!

  2. We always split our bonus, where half is going to investing and half is going to ‘something extra’ or savings. The latter depending on the moment, like travel, upgrade in furniture or last year a bathroom remodelling (of course the bonus didn’t cover all the cost here).

    It’s a good thing that you both get a payraise and bonus, congrats! Seems like you’re really appreciated. I would spend it on what makes me or both of us the most happy. Doesn’t matter if that would be a laptop or a vacation.
    Divnomics recently posted…Stock watchlist for December 2016My Profile

    • Wow a 50/50 split. I like that idea between investing in the future and enjoying life now.

      Sounds like an awesome balance and something to think about.

      Thanks for sharing!!!

  3. Sometimes you just have to treat yourself! Since your wife now has a nice rose gold phone, I’d opt for the vacation! As you said, your more interested in memories these days and both Iceland or Galapagos sound very memorable.

    Our last big vacation was before our kid was born and we went to Peru to see Macchu Pichu. Very memorable I must say!
    The Green Swan recently posted…The Investment Inflection Point: The FIRE StarterMy Profile

    • Oh man Macchu Pichu is on our list of things to see. Having a one year old doesn’t make it easy but I think we can do it someday in the future 🙂

      I think I’m with you in that it makes sense to go with memories.

      Thanks for sharing!!!

  4. I receive 2 bonuses a year in my job. Of these a portion is given to all workers and then I can receive some additional due to individual performance. Along with that I’ve also had restricted stock units as a bonus. The bonus is always split. The guaranteed to all employees pays for our travel budget for the year excluding travel hacking. It’s usually 2-3 percent of pay. The personal bonus in any form funds Roth contributions. The discretionary personal bonus has been all over the map and is the reason my pay has changes drastically from year to year.
    Full Time Finance recently posted…Why Should I Invest in Bonds?My Profile

    • That’s awesome that you get two bonuses a year and you know how to allocate them.

      Sounds like between traveling and your Roth that you have figured it out 🙂

      Thanks for sharing!!!

  5. Invest it! I’ll be receiving a bonus in February and that’s my plan. One of my goals for 2017 is to increase my real estate investments through Fundrise. That’s where my bonus money will be going. We’ve always saved my bonus in one way or another. When we were younger and trying to build up our emergency fund, it always went there. Not as exciting, but it gives you a nice little boost in meeting your financial goals.
    Go Finance Yourself! recently posted…Screw the Budget! Pay Yourself First and Forget the RestMy Profile

    • Thanks for stopping by Go Finance Yourself

      I’ve heard about Fundrise but haven’t done as much research as I should.

      How has your experience been with them so far?

  6. I got a bonus in January for half a paycheck and I put the whole thing into my travel budget. After reading so many FIRE blogs I felt like the right thing to do was to throw it all into my investments, but I decided that it was more important to spend it on a quality experience with my wife. It’s always tough to balance spending for now and saving for the future.

    My vote is for Iceland!

    As a side note: I completely understand your cell phone situation. I also have an old and slowly dying cell phone. I also never complain about it. It drives my wife crazy, though.
    Matt @ Optimize Your Life recently posted…Happy Giving Tuesday!My Profile

    • Thanks for the advice Matt!!!

      I having been trying to get my wife to go to Iceland for the last two years. Maybe this is the year that I finally convince her 🙂

      Thanks for stopping by and sharing!!!

  7. “Treat yo self!”….this reminds me of a funny Parks and Recreation episode where the characters treat themselves to anything they want.

    Congratulations on the bonus! I typically invest mine after spending 15% – 20% of it.

    I think it’s interesting that bonuses have become more common instead of wage increases. Employers probably prefer that because it’s easier just not to pay a bonus vs. cutting someone’s salary.

    I want to go to the Galapagos too! I’d love to see the giant tortoises. I’ve seen them at the zoo before and they’re amazing animals!
    Andrew recently posted…7 Big Money Mistakes To Avoid In Your 20sMy Profile

    • Andrew I LOVE Parks and Rec. I still watch episodes whenever I have time. It’s such a fun show.

      Investing is probably the prudent thing to do in this case, like most readers are suggesting.

      The Galapagos does sound tempting. All that wildlife would be fun to see up close!!!

      Thanks for sharing!!!

    • Since I’ve been “responsible” this year I was looking for an excuse to go on vacation. Sounds like you’re with the majority saying to invest it.

      Thanks for stopping by and sharing!!!

  8. Congrats on the bonus! Since you’ve got your bases well covered, I say spend it on travel. That’s something both you and your wife can enjoy and memories you can keep forever. If it’s between Iceland and the Galapagos, I vote for the Galapagos, mainly because I can’t stand winter and I’d love to go somewhere warm.
    Gary @ Super Saving Tips recently posted…Follow Your Passion and Make Some Money TooMy Profile

    • Hahahaha…You sound like my wife. she hates the winter and wants any excuse to avoid it.

      Although when we went to Alaska a couple of years ago, she loved it.

      But she’ll definitely be happy to see your comment!!!

  9. Congrats on the bonus! I also vote for Iceland (or travel in general). You’re already at a savings rate of 70% and have no debt. Spend the money on a great experience, and then tell us all about it!

    • Thanks SRGO!!! I can’t wait to show my wife all the positive comments on Iceland.

      She loves warm weather and said everyone would suggest the Galapagos Islands 🙂

  10. Congrats on the bonus! My personal opinion is that as you made smart financial choices over the year, it might not be an unaffordable luxury to buy that laptop for your wife AND treat the two of you with a nice trip. In my view you simply deserve it every now and then… Sounds like there’s nothing you would desperately need, so you will have the chance to use the payrise for extra, regular investments. At least this is what I’d do…
    Roadrunner recently posted…How to be a Good Farmer of Your Investments?My Profile

    • I like your thinking Roadrunner. My wife needs a laptop badly. She doesn’t read the comments that often, so I’ll share that she is getting one. Albeit used but still a 2015 model. So there still might be money left to do a trip as well.

      Thanks for stopping by and sharing!!!

  11. I personally would do the travel. Funny enough, I’m planning a February getaway and Iceland Northern Lights viewing and Galapagos are at the top of the list! Too funny. I’m pretty sure I will be going to Galapagos, though.

    BTW, I’m totally like your wife on the material things. While I do like things to work well, I wouldn’t upgrade just because it’s there. I am actually downgrading, or more positively put, “simplifying”, my electronics. 🙂
    Primal Prosperity recently posted…The Life Changing Magic of Not Giving a ‘Bleep’My Profile

    • You will definitely have to share your thoughts on Iceland, especially in February.

      Our neighbors just got back from Iceland. We haven’t caught up with them since it was Thanksgiving last week.

      But I am imagining that it was amazing from some of the photos I saw.

  12. Congrats on your bonus and likely raise. I am sure you have earned them! I had to update some electronics as well. I went from a 6 year old laptop to a new iMac! Wasn’t the most fiscally conservative thing to do but sometimes you have to live a little. Hard to argue against a vacation too. Time away with loved ones is very valuable. Best of luck on whatever you decide!
    Mr Defined Sight recently posted…Everybody has Stress Regardless of the OccupationMy Profile

    • My wife’s laptop is also six years old and since she doesn’t always read the comments I’ll share that she actually is getting a gently used laptop from a friend of ours for dirt cheap. So we might be able to upgrade her laptop and save enough to go on a fun vacation 🙂

      Thanks for sharing!!!

  13. Congratulations on your bonus and your raise, I’m sure both are well deserved. I vote for the vacation. You would create lasting memories, enrich your lives and make a bunch of random internet strangers turn green with envy when you post those fabulous pictures. Win, win, win : ).
    Mrs. BITA recently posted…Why I wear socks with holes in themMy Profile

    • Thanks Mrs. BITA. I am really want to allocate some of the money towards a vacation. Now my wife and I have to decide somewhere warm and tropical or somewhere a little colder.

      I know her vote will be warm but maybe I can convince her to wait until later 🙂

      Thanks for stopping by and sharing!!!

  14. Ooou looks like you have a tough decision to make! Since she was already gifted an iPhone and yours works fine, I’m assuming you have to decide between the laptop and a trip the Iceland. It’s really sweet that your options were based on your wife’s needs 🙂
    My bonus is going directly to paying off debt this year!

    • Thanks for stopping by Jessica.

      It sounds like you are being super responsible and paying off debt. Awesome job with your discipline.

      I have definitely been there before 🙂

  15. I’d take the vacation, but we have two desktops in the house in addition to my laptop, so there’s always another option to use (and I’m not a Mac person anyway.)

    One thought if you were leaning toward the laptop but needed to convince your wife is to see if your wife would gift the old laptop to her sister if you got her a new one. That way the beloved laptop would have a home and your wife would have a new machine.
    Emily Jividen recently posted…State of the Blog: November 2016My Profile

  16. Good to get extra money.

    We do actually spend a part of the bonus money on holiday experiences. We have a system in place that generates a relatively good savings rate so one day we can be FI. On the other hand, we do want to live NOW. Travel is important to us, so , that is where we spend it: this year: Ski with the family.
    Amber tree recently posted…Beat the FIRE Joneses!My Profile

    • I really wish I could get into to skiing because it looks like so much fun. Unfortunately I have really bad knees so I am relegated to snow tubing 🙁 But I still have fun. Hope you all have a great trip this year!!!

    • Thanks T for sharing!!! My wife is so amazing and since we’re already hitting all of our investment and savings goals.

      I figured I’d crowd source and hear what folks thought. You’re in the majority with most folks saying I should invest it.

      Probably the smart move 🙂

    • You are absolutely correct, I NEED a happy wife for my sanity 🙂

      My wife doesn’t always check the comments so I’ll share and say I think I have a lead on a good Macbook but still trying to compare.

      So we’ll see 🙂

      Thanks for stopping by and sharing!!!

  17. “But, now that I am debt-free and saving over 70% of my take-home pay”… wow that’s fantastic! Saving 70% of your take home pay is an inspiration.

    • Thanks for stopping by Harley!!!

      It took awhile to get to 70% but I’m finally there. I have to admit that in someways it’s painful but in other ways not as much as I thought it would be.

      Thanks for sharing!!!

  18. Congrats on the bonus there MSM, I’d probably be a bit boring and save/invest at least 50% of it and then probably spend some on heading away on a break, maybe head out to a nice restaurant and donate a bit as well 🙂

    • Thanks for stopping by and sharing Jef!!! Well I’m still waiting for the bonus so I haven’t spent it yet. Hopefully it comes soon and I can figure out what to do with it 🙂

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