Bonus - Save or Spend

[younginvestor2013]

This year, I will be getting 15% of my 2015 salary as a bonus payout. This was my 2nd bonus received with my company. For 2014, I received 20%. So I was anticipating receiving at least that for 2015 but was told the amount was 15%.

Since I'm not in a sales role, I asked my boss if it was related to my performance but I was told it was in no way related to my performance just that our expenses had increased with hiring more staff and that we were on target with our sales goal.

I was kind of disappointed, since the 5% was about $5k less than I thought I'd get, but still feel relatively fortunate since I work in a pure overhead role, and have very good work life balance and do not work long hours.

Apparently, I've learned many others in the company are pretty upset as I guess bonuses were cut across the board. I am still pretty new and didn't have any rationale to justify a bigger bonus, but I guess others are quite upset.

 

[younginvestor2013]

Oh, and to answer the question, I will be putting 6% in my 401k to get the 3% employer match. After that and taxes are taken out, it should be about $5-6k, and I will put the rest in savings. What I like to do is save the rest and make splurges throughout the year. I.e., it becomes my vacation fund, or christmas gifts fund, or "long weekend get away fund".

I never end up spending it all (I'd guess maybe $3-4k), so some of it always rolls forward year after year and my cash savings get built up more.

 

[DrRoy]

I always had a surplus of income over expenses which was therefore saved, so any bonus I received simply increased that surplus.

One bonus, however, happened to coincide with a new car I had planned to buy back in early 2007. The bonus, which ended up being about 25% of the car's price, resulted in my not having to pull as much from savings as I originally thought.

This is fairly close to my situation. For most of my career, I did not get a bonus. Around 12 years ago, Megacorp started giving bonuses based on meeting certain financial targets, and the targets were low enough that we got something every year. The bonus was linked to your level, and my early ones were $1000-3000. That amount just went into the checking account and for the most part went toward funding that year's IRA contribution.

Two years ago I got a promotion that made my bonus more like $7000-9000. The first year it mostly went to FIT as my carry forward of capital gains losses from the great recession ran out (I should have seen that coming). Last year I needed to replace my car so it went toward that, and I paid cash for it.

This year will be the first of the larger bonuses that will be totally discretionary, and I am thinking of using 10-20% to do/buy something fun with the DW, and saving the rest.

 

[jollystomper]

In my job role I am eligible for up to 35% of my base salary in bonuses, and am also eligible for awards. I never budget for them, always treating it as "surprise" money. I normally have spent about 10% of the bonus and saved/invested the rest. Back in theY2K fear days were my biggest bonuses due to the demand for those skills. The highest bonus/awards total I received in a year was over $60k after taxes.

These days I've loosened up the spending, spending half the bonus and saving/investing the rest. We are using it for long term home improvement products and "long weekend" vacation trips.

 

[scrabbler1]

This is fairly close to my situation. For most of my career, I did not get a bonus. Around 12 years ago, Megacorp started giving bonuses based on meeting certain financial targets, and the targets were low enough that we got something every year. The bonus was linked to your level, and my early ones were $1000-3000. That amount just went into the checking account and for the most part went toward funding that year's IRA contribution.

Two years ago I got a promotion that made my bonus more like $7000-9000. The first year it mostly went to FIT as my carry forward of capital gains losses from the great recession ran out (I should have seen that coming). Last year I needed to replace my car so it went toward that, and I paid cash for it.

This year will be the first of the larger bonuses that will be totally discretionary, and I am thinking of using 10-20% to do/buy something fun with the DW, and saving the rest.

Your bonus history is a little like mine when I was working. For the first 17 years I worked, there was no annual bonus program, only small bonuses ($1,000 or less) as special awards for special achievements. I got 3 of those in those first 17 years. Then, starting in 2003, they began giving out annual bonuses, but only for full-time employees (I worked part-time starting in 2001). But in 2004, they extended bonuses to part-timers like me. My largest bonus came in 2007, the aforementioned one which followed my new car purchase. The bonus dropped in 2008 after I had reduced my weekly hours worked, 7 months before I ERed. The bonuses were always between $2,000 and $4,500.

 

[panhead]

I have always saved 100% of my bonus, as well as any other irregular income such as ESPP, RSUs, additional income when SS is done for the year, etc. Last year I started doing something a little different: I round down to the nearest $1000 when I receive the bonus, etc and save this. The remainder (obviously under $1000) I leave in my checking to be spent. Doesn't make a huge difference, but gives me a little extra $$. I also stopped saving the extra when SS, and 401k contributions are finished for the year (I spread 401k across most of the year, but it ends around October). Again, not a huge change, but I've done quite well with savings, so I think I can loosen up a little bit. So far this has only led to a slightly swelling checking account, so it might get saved anyway

Pan