Getting your AbbVie bonus in March is always a great feeling. It's a reward for your hard work and dedication to your job. However, how you choose to spend that bonus can make a significant difference in your financial future. In this blog post, we will explore five ways to spend your bonus, with a focus on the category of giving it all away.
Giving it All Away
One way to spend your bonus is by giving it all away. This option may not be for everyone, but it's worth considering if you're looking to make a positive impact on the world. Giving to a charitable organization or a cause you believe in can be incredibly rewarding, both personally and financially. It's also an excellent way to reduce your taxable income if you choose to donate to a registered charity.
Before giving your bonus away, you'll want to research charities and causes that align with your values. Consider the impact you want to make and the issues that matter most to you. You can also look for organizations that have a proven track record of success and transparent financial records.
Once you've identified a charity or cause you want to support, it's essential to make sure you understand the tax implications of your donation. Donating to a registered charity can provide you with a tax receipt that you can use to claim a tax credit on your tax return.
If you still want to donate but not sure of the cause you want to support, you can set up a Donor Advisor Fund (DAF). This is an account where you can donate, get the immediate tax deduction, but choose who to donate it to later in the future. You can even invest the funds so that the amount grows to be a larger donation amount in the future.
Defer it Using a Deferred Compensation Program
Another option for your bonus is to defer it using AbbVie’s Deferred Compensation Program (DCP). This program allows you to defer a portion of your income until a later date, typically when you retire. The advantage of this approach is that it can help you reduce your current tax liability and allow your funds to grow tax-free until you withdraw them.
Your election of how much to defer out of your bonus needs to be made in the year prior, so it pays to know how much you can do without when March rolls around.
Not only does deferring to this program reduce your current income, but it allows you to design retirement streams of income for the future. You can read about AbbVie’s DCP in other detailed posts on the site.
Plan as Though it Doesn't Exist
If you're not sure how to spend your bonus, you could plan as though it doesn't exist. This approach involves taking your bonus and adding it to your existing savings or investment portfolio. By doing this, you can continue to build your wealth and work towards your long-term financial goals.
To plan as though your bonus doesn't exist, you'll need to have a solid financial plan in place. This plan should include your short and long-term financial goals, your current savings and investments, and your risk tolerance. It's also essential to review your plan regularly to ensure that it's still aligned with your goals and financial situation.
When the bonus amount comes in, you automatically transfer it to those other accounts and it’s like it never made it into your checking account!
Use it All for Aggressive Investing
If you're comfortable with risk and have some investment knowledge, you could use your bonus for aggressive investing. This approach involves investing in high-risk, high-reward opportunities that have the potential for significant returns. This could include rental real estate, speculative investments (crypto currency, NFTs, collectibles) and even untraded REITs and hedge funds. These should be used outside of your current portfolio and with the knowledge that you may get a great return or potentially lose your money.
Before choosing an aggressive investment strategy, you'll want to consider your risk tolerance and investment knowledge. It's also essential to research the investment opportunities available to you and understand the potential risks and rewards. Additionally, it's crucial to have a diversified portfolio that includes a mix of low-risk and high-risk investments.
Use it for a Lavish Lifestyle
Finally, you could use your bonus for a lavish lifestyle. This approach involves using your bonus to purchase luxury items or experiences, such as a new car, a vacation, or a designer wardrobe.
As long as you’re on track to meet your financial goals through other means of savings and investing, then blowing the bonus should be seen as a sign of enjoying your hard work!