It’s the time of year when things start slowing down, leaving you free to plan how to spend your year-end bonus. While it may be tempting to spend it all on a new 3D TV or an extravagant trip to an exotic destination, it’s always a good idea to prepare for rainy days. We asked our wealth experts for their recommendations on how to get the most out of your year-end bonus.

Retirement plan in a jar

Settle debts

Receiving a lump sum is a great way to reduce (or settle) any outstanding debt.

This may seem like a waste as the payment probably won’t reduce your monthly installments. But it will reduce the number of installments you need to make, saving you money in the long run. To maximize your savings, start by settling the debt with the highest interest charge.

Annual payments

Many places offer a discount for upfront payments made for the year ahead. A good example of this is tuition fees.

Your year-end bonus can also go a long way in purchasing all the back-to-school goodies that your kids will need for the upcoming year.

Maximising tax breaks

You can receive tax deductions for investing in a retirement annuity up to a certain limit.

If you haven’t maximized this tax deduction yet, you can invest a lump sum into a retirement annuity before 5 April 2016 to receive the tax break on your 2015/2016 return.

Getting through January

Year-end bonuses and salaries usually come early in December, leaving many to struggle to get through the dreaded longest month of the year: January. Try to keep your December salary aside until after Christmas, or store a portion of your year-end bonus to help get through the last weeks before January’s salary clears.

Save

There is no better time to start saving than right now. Seek advice from a financial planner who can assess your personal circumstances and advise on an appropriate investment for you.

For personalised wealth advice from a trusted financial advisor, contact our sister company, Sable Wealth.

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