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Welcome to Merin Talks Your Money, the personal

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finance edition of Merin Talks Money. In these

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bonus podcasts, yes bonus, we get tips

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from experts across industries on how to make the most

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of your money. I'm mere in Sunset Web

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this week it's bonus season. A question

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I'm sure is on everyone's minds is how

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you should spend or not spend your

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bonus, assuming you get one. Joining

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me now is Claire Balentine, personal finance reporter

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at Bloomberg News. Hi Claire, Hello,

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Now listen. The first thing we should ask is are

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most people going to get a bonus? You know, in

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the column you wrote about this a few months ago, you start

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with companies are slashing jobs, pay us starting

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to flatline, analysts bracing for a volatile

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year. Is there a chance that maybe bonuses

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are going to be a little disappointing this year?

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What we've seen, at least in the US says that bonus

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season has been disappointing from some

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of the big banks. A lot of bankers are

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getting less bonuses, some getting none

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at all. So that's been disappointing here

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and sort of reflects the broader environment

1:01

of people getting a bit our companies getting

1:03

a bit more worried about the economy and

1:06

then slashing bonuses as a result.

1:08

Yeah, it's a quick way to cut costs. Now, if

1:10

we're in that environment, and clearly we are. If

1:13

you do get a bonus, maybe

1:16

you should just stick it in the bank and hopefully

1:18

the best for next year's.

1:19

That is one take, and some advisors will

1:21

recommend that, but yeah, I think it's

1:24

it's kind of based on the person.

1:26

Okay, so maybe you should spend it.

1:28

Well, So there are a couple of schools of thought here, and

1:30

so you know, the financial advisors that I

1:32

talked to, very first is looking

1:35

at your financial situation and if you

1:37

have debt, if you have outstanding

1:40

you know, student loans, if you

1:42

don't have an emergency fund, those

1:45

are the places where your bonus

1:47

should go to.

1:48

Okay, So the first place, sorry, I'm going to

1:50

go back and get nailed down this personal finance stuff.

1:52

The first thing you should probably do is

1:54

make sure that you have a certain

1:56

number of months of living money you're stuck in an account,

1:59

right, we always say six months. If you've got six months

2:01

worth of cash in an account, regardless whether

2:03

you have debt or not still have six

2:05

months of cash in an account, because that's your

2:07

freedom money. It gives you a sense

2:09

that you can if something goes horribly wrong, you can leave

2:11

your job. You can there's a lots of things you can do if you know

2:13

you've got six months worth of living in the bank.

2:16

So is that the first thing? Is that what most

2:18

financial advisors say?

2:19

Exactly? Yeah, and the six month is a good one.

2:21

Some recommend three, but they're bumping

2:24

it up to six months because the job market

2:26

is a bit more shaky.

2:27

Yeah, okay, so you do that, and then from

2:30

what you said, I'm guessing the next thing is get rid

2:32

of any high interest debt.

2:34

High interest debt. Yeah, and that's you know, that's

2:36

not just the consumers that are on the

2:38

lower end of the spectrum. A lot of high

2:40

earners also have credit card debt

2:43

or personal debt. So putting

2:45

your bonus towards that is always a good idea if

2:47

you.

2:48

Have it, and in the in the US

2:50

maybe student debt.

2:52

Student debt can also be a

2:54

big factor too, if you have private student loans.

2:57

There's a balance here though, I think you know, obviously,

2:59

if you don't have an emergency fund, you want to put your bonus

3:01

money towards that. If you have a lot of bad

3:04

debt, you want to put the bonus money towards

3:06

that. But if you have you know, say

3:08

you have a car payment, or a

3:11

mortgage payment, or or student loans that

3:13

don't have a crazy high interest rate, those

3:16

can kind of be okay to carry over and to gradually

3:18

pay down. Unless you're one of those

3:20

people who just can't stay in the idea of debt,

3:22

then maybe you should use your bonus for it.

3:25

Yeah, because those debts, mortgage debt and all that kind of

3:27

thing, they're set up to last for twenty years, and

3:29

so you know, you might be able to take your bonus

3:31

and do something completely different with it rather than the

3:33

get rid of a debt that you already planned to have long

3:36

term exactly.

3:38

Yeah, And I think the thing that was really

3:40

interesting to me and talking with financial advisors,

3:43

you know, obviously the best

3:46

thing you can do for your financial health is

3:48

to you know, pay on debt and all that, but

3:51

they really stress the fact that you should use

3:53

at least a little bit of your bonus

3:56

money on something fun. If you just

3:58

you know, pile it all into

4:01

your bad dat or into your four oh one k.

4:03

It's a little bit sad. I mean, this is what people work

4:06

for all year. You should treat

4:08

yourself a little bit. And I think, you

4:10

know, I think advisors would

4:12

even say, you know, maybe you

4:14

put the you know, ninety five

4:17

percent of it into your bad debt,

4:19

but use a little bit to treat yourself, and

4:21

that kind of motivates you to keep

4:23

building up good financial habits.

4:25

Now, that's the interesting One of the things that we often

4:27

say on this podcast, John and I is that your

4:30

financial life is a balance between

4:32

the present and the future. And it's quite

4:35

easy to get yourself caught up, particularly

4:37

if you read the money pages in the newspapers or personal

4:39

finance websites, saving websites, et

4:41

cetera. It's quite easy to get yourself caught

4:43

up in the idea that your money should all be

4:45

dedicated to the future. But of course now

4:48

is now and the future is unknown,

4:50

so we need to find a balance between living

4:52

well now and planning to live well in

4:54

the future. So with that in mind, it makes perfect

4:57

sense, almost regardless of your debt

4:59

position, to take a chunk of a bonus

5:01

and say, well, I'm going to spend that on something that works

5:03

for me. I'm very taken with you wrote a bad a

5:06

young woman called Donna Hickson who's just going

5:08

to spend a bonus on shoes.

5:10

Yes, I loved that. I mean that was so

5:13

great just to just someone who was sort

5:15

of treating themselves after

5:17

a long, hard year. Obviously, just

5:19

like you said, I think that's so great. There is a

5:21

balance with it all, you know, should

5:23

you spend all of your money

5:25

on shoes, No, but a

5:27

little bit treating yourself. And the

5:29

big thing that career coaches I talked to said

5:32

is that motivates you to work hard the

5:34

next year. That makes you feel like your job

5:37

is producing something

5:39

and is creating the quality of life that you want,

5:42

and so a lot of it just comes down to your motivation

5:44

for next year.

5:46

Well, that was an interesting tip, and that again I'm on

5:48

the same columns. I love your columns. Class on

5:50

this column a bad tay lad,

5:53

which is that's got to be an American name, hasn't

5:55

it.

5:56

Oh?

5:56

Yes, yeah, it's a corporate lawyer.

5:58

And she pre spent some of

6:00

her bonus on some Apple products and

6:02

then she put a video about it

6:04

on TikTok and by doing

6:07

that she somehow encouraged

6:09

herself to actually work

6:11

the hours that she needed to get that bonus.

6:13

And she said, rewarding myself preemptively

6:16

actually motivated me. And that's

6:18

one way to look at it, isn't it spend it now, then

6:20

you've got to put the hours in to get

6:22

that bonus.

6:24

That was an interesting one, And I don't know if

6:26

I would would recommend that, but

6:28

I think pre spending can be a little dangerous.

6:31

But I do think there's something there in, you

6:33

know, motivating yourself to get to the to the

6:35

goal. Or maybe you know it's bonus

6:37

season now and you can sort of think about

6:40

next year. Maybe you say to yourself, Okay,

6:42

if I do you know these three things, then

6:44

I'm going to spend you know, my

6:47

entire bonus on this, you know, one

6:49

pair of shoes. I wanted this vacation. So

6:53

seems to me like rewarding yourself at the

6:55

end is better. But you know, to each their own.

6:58

I mean one of the key things

7:00

here. In fact, I tend to think that in life

7:03

in general, one of the key things that one

7:05

should always be doing is attempting

7:07

not to create regret. Right,

7:09

I think it's the worst emotion you can possibly

7:12

have is regret. You want to spend a lot

7:14

of your time thinking about your life in terms

7:16

of how can I do this

7:18

so that I don't regret my choices,

7:21

And when it comes to a bonus, you are

7:23

leaving yourself a lot of room for regret

7:26

in either direction. If you spend it all

7:28

on boring stuff, you might regret that you

7:30

never had that great trip to for Lanka. And if you

7:32

only have the great trip Tosh for Lanka, boy, you're

7:35

going to regret not paying off some of.

7:36

That debt definitely.

7:38

And there's sort of a middle ground too. I think

7:40

that at least some advisors I talk to you

7:42

suggest it. You know, maybe you can use

7:45

your bonus to splurge

7:48

in a way that's going to help you long term.

7:50

Maybe you sign up for a fancy gym

7:52

membership, or maybe you have

7:54

a meal delivery service which

7:57

both makes your life a little easier

7:59

and maybe helps you eat healthy. So

8:01

there's there's a middle ground there too. You can

8:03

set yourself up for maybe some other health

8:06

and lifestyle goals. I talked to one

8:08

woman and I just loved this. She was a financial

8:10

advisor herself, and she spent

8:12

some of her bonus on permanent

8:15

makeup. So that's the eyeliner

8:17

that is permanent, So she

8:20

could save herself money getting ready or

8:22

save her self time getting ready

8:24

in the morning, and she has young kids. I just thought

8:26

that was so great.

8:27

That's a great gift to yourself. But Claire, what if

8:29

eyeliner fashions change?

8:32

M I'm feeling potential

8:34

for great I am feeling potential

8:37

regret.

8:38

I think I think there are versions that you

8:40

know, last maybe six months or so. It's

8:43

not permanent, permanent, but yeah, that's a

8:45

great point, all right.

8:46

The one I'll tell you what, the one that I particularly

8:49

liked that is in another one of your columnies

8:51

you suggested and it was again it was

8:53

suggested from an IFA who said that a lot

8:55

of his male clients, and this is such a male

8:57

thing, isn't it, they like sports betting. And

9:00

so one thing you can do with the bonus is you

9:02

can take a small amount of it that you think

9:04

to yourself, I just don't mind losing this, and

9:07

I'm going to have some fun with it, and you can put it into

9:09

a separate account and use it for your

9:11

sports betting, for your crypto investing.

9:15

Hate mail for the user dress please your

9:17

crypto investing, your sports betting,

9:19

and possibly maybe your your

9:22

moonshot investing, your small cap

9:24

investing, your high tech, high

9:26

growth investing, whatever it is, things that have a much

9:29

higher risk profile than the stuff you might put in

9:32

in the UK SIP and in the US your four oh one k, etc.

9:35

I think with a higher risk profile, you can set yourself

9:38

up a little account that is a play account of fun account,

9:40

and if you lose it, well, hey you lost it, and maybe

9:42

it's it gives you the same pleasure as a pair

9:44

of shoes might give someone else.

9:46

Definitely, And I like that too because

9:49

if you put it in the fund, you can

9:51

use that in June. You know, you don't

9:53

have to spend your bonus right now when

9:55

you get it. You can put it in a fund and then

9:58

you know, gradually draw it down if you need

10:00

it throughout the year. So there's there's no there's

10:02

no law that says you have to spend your bonus right now.

10:05

And there is another

10:09

interesting idea that

10:11

you wrote about that I'm very keen on because

10:13

I'm a natural pessimist. Well I try to be a natural

10:15

optimist on some things. I'm a natural an

10:18

apocalyptic mindset knocking around in

10:20

the back and as regular listeners

10:22

will know, and one of the things that someone

10:24

suggested is using some of your

10:26

bonus to invest in preparing

10:29

for an emergency. And this really

10:31

is to suggest you don't think you're going to get a bonus next

10:33

year, Assemble an emergency kit, accumulate

10:36

a week's worth of food, set up a basement

10:38

retreat, or even a full bunker. A

10:40

full bunker, you have quite

10:42

a big bonus. A full bunker.

10:46

Yeah, that one's a bit extreme, but

10:48

I think that's that

10:50

was a really interesting one, and I can sort

10:52

of you know, see, sure, if you want to set up

10:55

a full bunker and you have the funds for it, go

10:57

for it. But you know, there's even

10:59

a bit more middle ground, you know, like,

11:02

you know, do you have stuff in your apartment if

11:04

the power goes out? It's probably a good idea. Does

11:06

sort of think about that, you know, is

11:08

your pantry stocked? Do you

11:10

have these things that are gonna make your life?

11:13

You know? Okay, if if

11:15

say you you know, have a bad illness and

11:17

you know, like during COVID times, we needed food

11:20

to just stock up on that. So

11:22

some of these smaller things. You know, do

11:25

you have a like

11:27

a toolkit? You know, I know a lot of people that

11:29

maybe you probably don't have that in their New York apartment.

11:32

Now when everyone has a toolkit, everyone has a

11:34

toolkit.

11:35

Well, I don't know people my age.

11:38

I'm I'm you know, in my

11:40

late twenties. Now I think maybe

11:42

maybe some don't. But it's you know, investing in a cod

11:45

is a good idea.

11:46

Want you to go out and spend some of your

11:48

bonus on a toolkit?

11:49

Okay, noted, I

11:51

will definitely do right.

11:54

In the UK, of course, we did a podcast last week

11:56

with an energy consultant, and listening back to

11:58

that, I can tell you that there's a very strong chance

12:01

of blackouts coming in the UK relatively soon.

12:03

So everyone is going to want to have torches, candles,

12:05

a couple of weeks worth of food, et cetera, because you just

12:08

never know when that kind of thing is going to

12:10

come. So there's a lot in there. Now. One thing I

12:12

would say and to ask you about is that this

12:14

isn't really just about bonuses. Is that we're not

12:16

really talking about bonuses. We're talking about

12:18

any lump sum you might come into suddenly.

12:21

So everything that we've discussed holds for an inheritance

12:23

for example as well, doesn't it.

12:25

M Yeah, that's a great point too,

12:28

any sort of random sum of money that

12:30

you come into. And I think that's also a great point

12:32

because I know way too many

12:34

people that think of their bonus as part

12:36

of their salary and that's a dangerous

12:38

mindset because it's not guaranteed, so

12:41

you shouldn't be counting on that. But

12:44

yes, great point with if you have an inheritance,

12:46

if you have if you come into

12:48

any kind of money sort of randomly.

12:52

Or undeservedly, should we say undeservedly.

12:55

Yes, yes, great

12:57

point. And so you know, you could

12:59

have sort of a balanced approach to that. You could put,

13:02

you know, some to retirement. I think a smart

13:04

paying down bad debt, very

13:06

smart, maybe if you have kids, putting it in

13:08

their college fund, and then maybe

13:10

a little bit to treat yourself and

13:14

maybe to take a vacation or travel. That's

13:16

a good investment in yourself too, so

13:18

experiences. It's that balanced approach

13:20

I think is really important.

13:22

If you've got a huge bonus and you could take any trip

13:24

you wanted to go anywhere in the world, you wanted right

13:26

now, where would it be?

13:28

You know, that is a great question because I'm actually

13:31

about to do a three month job

13:33

swap in Hong Kong, so I

13:35

leave a week and a week and

13:37

so I it's

13:39

great timing because i have a couple of trips

13:41

planned that are kind of once in a lifetime

13:44

trips. I'm going to Japan

13:46

and I'm going to Thailand,

13:49

so that that's actually is where

13:51

my bonus money is going this year.

13:53

It's fantastic. Well claim, thank you

13:55

so much for joining us today, really really useful

13:57

information. Thank you,

14:01

thanks for listening to this Bonus Maren Talks

14:03

Money. We'll be back next week. In the meantime,

14:05

If you like us, show, rate, review, and subscribe

14:07

wherever you listen to podcasts. And if you have a personal

14:10

finance issue you'd like us to talk about, to get an

14:12

expert on to talk about, let us know.

14:14

This episode was hosted by me Maren Sunset

14:16

Web. It was produced by Summersati and Tiffany Choi.

14:19

Additional ending by Rishi Badjacal. Special

14:21

thanks to Claire Valentine