What do you do when you receive a large chunk of money? Maybe it’s in the form of an inheritance, a tax refund, a bonus check from work, a large commission check from work, or even lottery winnings… someone’s got to win those things, right? The question is, do you save the money or do you spend it?
There’s tremendous social pressure in America to spend that chunk of money you got. People are posting on Facebook how they got that new pickup truck, or they got the new boat, or they’re going on vacation because of a bonus check they got or even tax refund… Sometimes we can get comparatively large checks! You feel like you deserve spending it because you worked for that tax refund or that bonus check. There’s emotions and culture that are telling you to spend it.
“INSTEAD OF SAVING WHAT’S LEFT AFTER SPENDING, TRY SPENDING WHAT’S LEFT AFTER SAVING.” –Warren Buffett
What I’m about to say is both counter-cultural and counter-intuitive. What I’m telling you to do is go ahead and reward yourself with something small, some token of your efforts, some token of appreciation for however you got the money. Then with the rest of the money–which should be more than half the money–what you should do is save that money. Save that bonus! If you have high interest rate debt, you definitely want to get that paid off. Otherwise, you should save that money for a rainy day, that emergency stash, or save it for a time when you no longer have to work for money!
If you are a salesperson, small business owner, or someone who gets “lumpy” income and participates in a 401(k) plan. You may be entitled to receive your “company match” if you contribute a percentage of your bonus check to your 401(k) or similar plan. If your company isn’t matching you when you receive your bonus checks, you may be missing out on some “free money”. If you have questions, we can help you through the process of getting the most out of your company match.