As the holiday season approaches, most of us are counting the days until that year-end bonus hits our account. There’s nothing quite like a little bank balance booster to get us in the holiday spirit!
Of course, splurging all that extra cash on impulse buys is probably not the smartest move with costs rising. Wouldn’t it be great if there was a way to make our year-end bonuses work as hard for us as we did for them?
Tony Clarke, Managing Director of the Rawson Property Group, says this actually easier than we might think. Here is his 3-step guide to making your bonus go further than ever before – without having to give up all your holiday spoils!
1. Invest a portion
“For anyone with a home loan, the smartest thing to do with any extra income is always going to be to put it into your bond,” says Clarke. “It may not be as much fun as splurging on some immediate luxuries, but if you look at it in the long term, it really is the best way to get the most out of your money.”
By putting a single lump sum of just R1000 extra into a R1million bond, Clarke says homeowners can save as much as R6000 over the course of their loan.
“That R1000 literally works six times harder for you if you put it into your home loan,” he says, “and the more money you invest that way, the bigger the savings.”
2. Save a portion
Bond repayments aren’t the only cost homeowners have to shoulder – maintenance and upgrades are also essential if you want to retain the value of your home as an investment. Because of this, Clarke suggests setting aside a portion of your year-end bonus for home improvements. This, he says, is a great way to get tangible benefits from your money while also increasing the value of your property.
“I generally advise homeowners to budget between 5% and 10% of the value of their property every year to keep things ship-shape, up-to-date and easily resalable,” says Clarke. “By putting some of your bonus towards those expenses, you can not only enjoy the improvements you make, but also increase your potential profits if and when you decide to sell.”
Some improvements are more likely to see good returns than others, so Clarke recommends chatting to a real estate professional in your area before going ahead with renovations.
“You have to keep buyer preferences in mind when prioritising improvements,” he says. “Things like rainwater harvesting and greywater systems are becoming very sought-after in the Western Cape, while built-in braais and outdoor entertainment areas are popular all over the country. If you can tap into these trends with your renovations, you could see exponential returns on your investment.”
3. Splurge a portion
It wouldn’t be a bonus if we didn’t splurge at least a little of it on non-essentials. For those of us with an interest in home décor, however, clever splurges can do double duty.
“If you’ve been dreaming of new bed linens, better curtains, or that family photo-wall, your bonus could be just the cash-injection you need to finally spoil yourself,” says Clarke. “These kinds of décor items make cherished gifts that can last for years to come, keep your space looking fresh and modern, and help turn any house into a home.”