Spend Your Bonus Before You Receive It

This is your brain on a bonus.

“A wage hike is very hard to take away, but bonuses and profit-sharing can disappear very quickly in hard times…More people are realizing that bonuses look like raises, but really aren’t.”
–Al Bauman

The common maxim of pay yourself first is all well and good for your paycheck, but what happens when you get a bonus? Your boss sits down with you for your end of year review, you’ve done well, and you’re going to get a bonus. If you don’t approach that bonus with some intentionality, then you’re going to find out that the bonus is gone and you really don’t have anything to show for it. The future you bangs his head against the wall in agony at your profligacy.

What to do?

Believe it or not, your gender, as this Harvard study shows, determines what you should do to stick to your plan.

First off, regardless of your sex, make a plan for what you want to do with that bonus. Some of the plan should go to spending on rewards for yourself so that you maintain your motivation to keep up a good job and to stick to your investment plans.

Here’s where your actions change depending on your sex.

Your gender affects what you need to do to succeed at a plan. Click to Tweet

If you’re a female, tell your friends what you’re going to do. Women are more committed when emotionally sharing with a social network, and this makes them more likely to stick to a goal.

If you’re a male, write down how you’re going to spend the money. Focusing on a written plan will anchor future goal-based behaviors, increasing the chances of hitting that goal.

Having a plan is only as good as abiding by that plan. So, when the bonus rolls in or when you raise the glass of champagne to toast a New Year, don’t forget to either share or write down those plans; otherwise, you’ll wonder what happened to your money and your future self will want to come back and smack you.

What do you do to not spend your bonus all at once and let Monkey Brain win? Tell us about it in the comments below.

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Jason Hull was the co-founder of Broadtree Partners, a firm that acquires $1-5MM EBITDA companies. He also was the co-founder of open source search consultancy OpenSource Connections, a premier Solr and ElasticSearch firm. He and his wife FIREd (financial independence retire early) at 46 and 45, respectively. He has a BS from the United States Military Academy at West Point and a MBA from the University of Virginia Darden Graduate School of Business. He held a CFP certification from 2015 - 2021. You can read more about him in the About Page. If you live in Johnson County, Texas or the surrounding areas, he and his wife are cash buyers of Johnson County, Texas houses.

2 thoughts on “Spend Your Bonus Before You Receive It

  1. Received my first ever bonus earlier this year, and I had it spent before I received it. And it wasn’t spent on stuff. The key for me was, as you said, having a plan before I ever had the money. By the time I did, all I had to do was execute.

    1. Hi, Nick – Thanks for commenting! It’s amazing how just the simple act of having a plan can direct your behavior. It’s like going to the grocery store with a list. If you have the list, you stick to it. If you don’t, the Morgan Spurlock comparisons will start coming. Congratulations on the bonus! You’re obviously creating value – a panel of DC entrepreneurs to watch judges can’t be wrong!

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