Advice » Salary & Benefits» Salary Information » Supercharge Your Raise or Bo ...
Supercharge Your Raise or Bonus

Supercharge Your Raise or Bonus

It's always great to get a raise or bonus. But it's even better when you use the extra cash to make smart financial moves that can increase its value exponentially over time.

"A bonus or raise is cause to celebrate, and the lucky recipient can certainly spend a small amount of that bonus or raise on a special meal or new outfit," says Evelyn Zohlen, president of Inspired Financial, a financial-planning firm in Garden Grove, California. "However, the rest of the windfall needs to go someplace that will benefit you long after the day of the good news."

This is one of those wonderful, all-too-rare opportunities to improve your financial situation without having to tighten your belt. You get the extra cash that can finally help you lower your debt, boost your savings and leave you with much more money than you're getting right now.

Here's how to supercharge your raise or bonus:

Pay Off High-Interest Debt

This is the perfect opportunity to pay off credit-card debt you just can't seem to shake, which may be costing you hundreds or thousands of dollars in interest payments every year. For example, if you have $4,000 in credit-card debt at 18 percent, you can save more than $5,600 by paying the full balance now rather than just paying the minimum until the loan is paid off.

Start an Emergency Account

Build up three to six months' worth of living expenses in a separate kitty. This helps you avoid landing in high-interest debt, paying penalties to access retirement money or raiding your long-term savings if you have unexpected bills or lose your job. Keep the money in an accessible money-market account that earns some interest. Search for rates at

Beef Up Your Retirement Fund

It's easy to stretch the money by boosting your retirement savings. If your employer matches your 401k contributions, you'll get free money, making your raise or bonus worth even more. And since the money is deducted pretax, it won't lower your paycheck nearly as much as you'd expect.

For example, if you're in the 25 percent tax bracket, get paid $5,000 per month and contribute $500 to your 401k, your paycheck will shrink by only $375, not the full $500. If your employer matches your contributions up to 3 percent of your pay, you'll get an extra $150 per month -- $1,800 per year of free money. So you end up contributing $650 per month while lowering your take-home pay by only $375, totaling $7,800 per year for only $4,500 out of your check. If you start investing that $650 per month in a 401k when you're 37 and continue at the same pace until retirement, you'll have more than $900,000 by the time you're 67, if your investments return 8 percent per year.

Invest in a Roth IRA

For 2010 tax returns, the maximum contribution to a Roth IRA is $5,000 ($6,000 if you're 50 or older) if you're single. If you invest a $5,000 bonus in a Roth IRA every year and your investments earn 8 percent annually, you'll end up with more than $566,416 in 30 years, and you can withdraw it tax-free in retirement.

Save for Something Fun

You can set aside a little money from your raise or bonus and painlessly finance a big vacation in just a few years. Saving $300 per month in a money-market account earning 3 percent can add up to more than $7,400 in two years. "Here's a way to save for everything ahead of time -- plane fare, hotels, food -- and when you come back, you don't get the ugliness of a huge credit-card bill," says Brian Jones, vice president of Cooper, Jones and McLeland, a financial-planning firm in Fairfax, Virginia.

Don't Forget Taxes

Those pesky taxes we all have to pay can leave you with a smaller windfall than you realized. Stuart Ritter, a certified financial planner with T. Rowe Price in Baltimore, says many of those who get a raise or bonus end up blowing more than they're actually getting. "Sometimes they'll know they're getting a $1,000 bonus and go out and spend $1,000, but when they get the check, it's just for $600 because of taxes," he says.

Articles in This Feature:

Latest Jobs

Posted: 05/22/2015
San Jose, CA, 95134
Posted: 05/22/2015
Amesbury, MA, 01913
Posted: 05/22/2015
Green Bay, WI, 54306
Posted: 05/22/2015
Lancaster, PA, 17603
Harmony Home Health
Posted: 05/22/2015
Mount Lebanon, PA, 15228

Want more personalized results?  Update Your Profile


Monster Communities

Teaching Community
Where teachers meet and learn.
Create and connect.
Networking for the career-minded woman.
Nursing Link
Where nurses call the shots.
More Monster Communities

Monster Partners

Scholarships, financial aid and more ways to pay for school.
Find top campus and online degree programs.
Military portal for the US Army, Navy, Air Force, Marine Corps and Coast Guard.
Financial Aid
Scholarships & financial aid.
Staffing for Government Jobs
Staffing and hiring solutions for federal government agency jobs.
More Monster Partners

Job Hunt Strategy

Six Ways to Make a Recruiter Hate You
If you want to blow your chances with recruiters -- and, by extension, with the companies they work for -- here are six perfect ways to do so.

Resumes & Cover Letters

Rev Up Your Resume to Relocate
Hoping to relocate? Get the ball rolling on landing the right job in the right location with these expert resume and cover letter tips.


100 Potential Interview Questions
Interview questions can run the gamut. You probably won't face all 100 of these, but you should still be prepared to answer at least some of them.

Salary & Benefits

10 Questions to Ask When Negotiating Salary
Most of us aren't natural negotiators, but asking these 10 questions during salary negotiations can help you get everything you deserve.

Employee Sourcing

Alt text
November Monster Employment Index Grows 13% Year-Over-Year, Tenth Consecutive Month of Positive Annual Growth.

For Seekers

Campus and Online Degrees
Advance your career and earn more with an online degree.
Free Salary Wizard
What are you worth? Find out and negotiate a better salary.
Research Careers
Get information on jobs and career paths to help guide your choices
Questions & Answers
Find answers to all your career related questions -- powered by Yahoo! Answers
Resume Distribution Service
Our distribution service puts your resume right in the hands of recruiters.
Resume Writing Services
Our experts will craft a keyword-rich resume that stands out in the crowd.
More Career Resources

For Employers

Career Ad Network
Target your job posting to more candidates on thousands of websites.
Hire Right Background Checks
Explore our background check packages to improve the quality of your hires.
Hiring Home Page
Find the best candidates for your business with Monster hiring solutions.
Job Postings
Find the right solution for your hiring needs. Starting at $99.
Power Resume Search
Monster's new search technology precisely matches people with your jobs.
Resource Center
Find staffing insights, labor trends, HR best practices and more.
Target Post
Connect with skilled, hourly and administrative candidates for only $99.

Social Media

Jobs on Twitter
Find jobs in your area and industry.
Monster Careers
Tune into our career advice and discussions tackling a wide range of topics and industries.
Monster Corporate & PR
Stay up-to-date on the latest news. Get the 'Who', 'What', 'When', and 'Why' on all things Monster related.
Monster Customer Service
Got a Monster question? We've got the answer. Whether you're a job seeker or employer, we can help you find the answers you need.
Monster for Employers
Find advice on hiring.
Follow Us
Check out our many pages and stay connected with the latest industry news, events, career advice and job openings.

Other Links

Monster Company Profiles
Explore companies and get information to guide your career decisions.
Compare Salaries
See how your pay stacks up to others in your field.
iPhone Application
Download the Monster app for iPhone and iPod touch.
Monster Job Seeker Blog
Monster Job Seeker Blog.
Monster Thinking Blog
Monster's Recruitment Trends Blog.
Jobs & Career Resources
Search Jobs:
For Employers: Post Jobs | Search Resumes | Advertise
About Monster | Work for Monster | Advertise with Us | AdChoices | Partner with Us | Investor Relations | Social Media
Terms of Use | Privacy Center | Accessibility Center | Help | Security | Contact Us | Sitemap | Mobile
©2015 Monster - All Rights Reserved U.S. Patents No. 5,832,497; 7,599,930 B1; 7,827,125 and 7,836,060 MWW - Looking for Monster Cable? - V: 2015.8.0.34-211