The start of a new year is a great time to take control of your financial life.During the holidays we discussed what parents should pay nannies for holiday bonuses and The Wall Street Journal quoted us on the topic as well. We also talked about how nannies can give holiday gifts on a budget.
If you followed our advice you did not rely on your holiday bonus to purchase gifts. If you worked hard and the parents rewarded your good work with a holiday bonus, don’t spend the extra income frivolously. Use the extra money to pay-off debt, build an emergency fund, make some investments, or even give to charity.
Pay-Off Debt:
First, if you have outstanding credit card debt use the money to pay-off as much debt as possible. Determine which card has the highest interest rate. That is the debt you want to satisfy first. We will discuss how to do reduce debt in more detail next Tuesday.
Build an Emergency Fund:
Once you have paid-off your credit card debt then look for the best possible savings account. Financial planners have been warning Americans to build a three-to eight-months worth of emergency cash in case they get laid-off. If something unexpected and expensive were to happen, that's the cushion that will soften your blow. The savings is for emergencies (like if you are unemployed or sick) only. Visit this blog again on Wednesday when we will discuss building an emergency fund.
Make Retirement Investments:
If you have no outstanding debt and already have a savings account for an emergency fund then you should consider making some investments. An Individual Retirement Account (IRA) is a personal retirement savings plan available to anyone who receives taxable salary during the year. Visit us again on Thursday we will discuss retirement investments more thoroughly.
Give to Charity: If you're already debt-free, have fully funded your investment accounts, and have your emergency funds are in order, you've got it made. There are plenty of deserving, but under-funded, charitable causes that could use some support. Stop by next Friday to learn how to get tax write-offs when donating to charities.
To learn how to manage your money in more detail stop by again next week when we will discuss gaining control of your finances in more detail.
Did you get what you expected for your holiday bonus? What did you do with your holiday bonus?
10 comments:
No I did not get a bonus. I got fired this year and haven't found a full time job yet. So, I have nothing to pay off debt, save, or do anything with.
The advice about an emergency fund is so important. The economic recession is not over and many are out of jobs.
Most nannies live pay check to pay check and can't save much, but cut back now. Better save in case you get laid off like me.
I got a great bonus and will be using most of it for credit card debt. It won't cover all of it but I saw I was paying over $80 per month in finance charges on just one credit card so it's time to start paying it down.
Happy new year!
Maria L.
Miami FL
Steph! Go back to sleep or go see a movie or something, it's New Year's Day! Do you ever stop working?!
Yes, I got a nice bonus. No, it won't pay off all my credit cards. Yes, I used it to buy some gifts, but I understand the need to pay down my credit cards quickly.
Career Nanny
Pam, Des Moines
I am blessed to have gotten a good bonus and will be using it to pay off debt too.
Karen M. Long Island NY
I've only been with my new nanny family a few months. I was happily surprised when they gave me a few hundred dollars in Gift Cards.
(Although, cash would have been better and easier for me, but I am sure they wanted it to feel more like a "gift".
With the gift cards I can save my cash when I go to the grocery store, etc. and use the Gift Cards instead- so with the extra cash I did not have to spend- I now have more in my checking account and can pay more on some bills.
I've even used a little of the gift card money to buy some things I've been wanting. So I am very happy and thankful for such thoughtful employers.
Good advice since most young live in nannies don't seem to think about their earnings since it seems so low. But without mortgage and rent costs or much food costs being a live in is the time to save save save their money!
My bonus was as expected $3,000 in upstate NY.
Can I thank you for being the best site ever. Concise, right on target. Maybe my goal for a few years from now will be to give to charity. For now, getting a savings would be a great goal. Happy new year and keep up the great work you do for nannies and au pairs!
I'd rather not say who I am but I am a nanny and am no where near saving any money. When I was a live in I had $8,000 saved. I have since moved out and all that savings is gone and I live paycheck to paycheck.
I hear about nannies that make these outrageously great wages in New York and LA and Boston. But I just haven't found those jobs.
Some friends have reduced their hours, not many have gotten better jobs or more hours since recession started.
I think your advice is great. It is true, but for me living paycheck to paycheck just not going farther into debt is my goal.
Parents spend and waste so much. But can offer anything they want and make us do anything they want making me feel like I'll never get a savings again. They don't realize how hard it is to make ends meet on this salary.
To anonymous above:
I had the same problem when I changed from live-in to live-out. While working as a live-in they bought me everything including toothpaste and laundry detergent and utilities.
It takes maturity to accept that you don't make as much as your employers and they are allowed to spend their money how they like. You must seperate yourself with them.
Despite economy I got a generous bonus. I have no debt, have savings, am building retirement fund, volunteer at animal shelter, donate almost 10% to church, and must pay my mortgage monthly. So you see anonymous, it is possible to save money as a live out but you must be frugal, have a budget and not be jealous of the way your employer can spend and you can't.
Also, there are still advantages as a live out nanny and ways to save. I eat most of my meals with the family I work for saving me hundreds in groceries during the work week. I am there for all 3 meals so I eat what I serve the kids.
Maria L., Miami FL
I got a great bonus (despite economy) and spent it on gifts and bought a new tv for myself. But, next year I will consider this advice. Just so easy to spend out on dinners with other au pairs and nannies in town.
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