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Christmas Bonus: 7 Smart Ways to Make It Count

If your company gives you more than a spiral-cut ham for Christmas, count your blessings. A Christmas bonus can lead to big fun, but that doesn’t mean you have to splurge on a 60-inch TV or an in-ground swimming pool.

Instead of adding another household gadget to your stash or starting an unnecessary home improvement project, why not use that bonus money to do something that will really help your family—and maybe even help others. If you’re wondering what smart things you can do with your extra cash, look no further. Here are the best ways to spend or save a Christmas bonus.

Best Ways to Spend Your Christmas Bonus

1. Knock out debts.

Okay, we know this isn’t the most glamorous way to spend your Christmas bonus, but it’s one of the smartest. If you have outstanding debt, use your extra holiday income to get rid of it faster.

If you’ve already paid off all your consumer debt, don’t let that mortgage payment slip your mind. Throwing extra toward your house payments means you could own your home faster. After all, there’s no place like a (paid-for) home for the holidays!

Sure, paying off debt might not be your idea of a fun way to spend a Christmas bonus, but think of it this way: If you get rid of your debts faster, you’ll pay less interest and have way more money in the long run. And then you can use that money for fun stuff, like football tickets, beachside villas or a whole sack of Christmas presents for kids in need.

Now, doesn’t that sound like the life?

2. Get out of town.

Most of us get way more than we want or need during the holidays, so why rush out and blow your bonus check on more unnecessary stuff? Studies show that experiences make us happier than things anyway.1

So, if you’ve been penny-pinching all year, treat yourself to a little R&R. If you’re married, surprise your sweetie with a post-holiday getaway. Got kids? Drop them off at Grandma’s and book a quiet bed and breakfast a few hours away. After all, improving your marriage is always a good investment.

3. Give it away.

Okay, relax—you don’t have to donate your entire Christmas bonus. First, find a way to treat yourself and your loved ones. Maybe take your family to a big meal at their favorite restaurant. Enjoy your fill of appetizers and main dishes—and don’t skip dessert!

While everyone’s indulging their sweet tooth, surprise your family with the why behind this delicious dinner on your dime—your Christmas bonus. Then, ask them for their ideas on how to give the rest of the money away. Do they know anyone who could use the help?

In the end, your family enjoys a special evening together, and your money will go toward blessing others. What could be more rewarding?

Best Ways to Save Your Christmas Bonus 

1. Boost your emergency fund.

If you’re out of debt but not quite ready to start investing (or if you dipped into your rainy-day savings to replace your busted car), now is a great time to restock your emergency fund.

Then, if your water heater dies in a few weeks or an icicle shatters your windshield, you don’t have to worry about how you’re going to pay for it. The unexpected always happens eventually, so fluff up your financial cushion now and let your year-end blessing bring you the blessing of peace of mind.

2. Beef up your 401(k).

Before you doze off, hear us out. Putting that bonus into your company-backed 401(k) might be the world’s easiest way to multiply your Christmas bonus money.

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Need the hard numbers? Let’s take a look: If you put a $2,000 bonus in your retirement account and leave it there for 20 years, it could turn into nearly $20,000! Do that every year and your small Christmas bonuses will turn into a full nest egg for your future. And that doesn’t even include the company match!

3. Explore investment options.

Maybe your 401(k) is already maxed out, or maybe you’re looking for other savings accounts to boost with your Christmas bonus. Either way, you’ve got some options.

If you’re still looking to build up your retirement, consider opening or contributing to a Roth IRA. We love the Roth IRA because you pay the taxes on the front end, meaning all the money in this retirement account grows tax-free. So when it’s time to cash out, all that Christmas bonus money will come back to you in droves. Cha-ching!

Or if you have kids, why not put that extra cash toward saving for their college. A couple thousand dollars might not seem like much with these crazy rising costs of higher education. But if you put your bonus check in a 529 college savings fund or Education Savings Account (ESA), it will grow right alongside your kiddos.

4. Jump-start your vacation.

Summer vacation is many months away, but it’s never too early to start saving. This year, get a head start by stashing your holiday check in a simple one-and-done vacation fund.

And because you’ve already got the cash on hand, why not just start booking the whole vacation now. You can usually score some killer deals on flights, hotel rooms and rental cars by shopping for a summer trip while everyone else is still recovering from Christmas.

So if you get a Christmas bonus this year, try one of the seven ideas mentioned in this article. And the best part is, you don’t have to pick just one option from this list. You can mix and match smart spending and smart saving to fit your family’s financial situation. For example, if your bonus is $2,000, maybe you pick one way to spend $1,000 and another way to save $1,000. Either way, your Christmas bonus is going to good use.

And with the holiday season upon us, you’ll need a way to keep track of all those gift purchases, charitable donations and decoration hauls (Christmas bonus or not). Check out our free EveryDollar budget tool. It’s the easiest way to stay on top of your spending while you check everyone off your list

Start budgeting for free with EveryDollar.

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Ramsey Solutions

About the author


Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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