My husband and I (mostly me) created a weird situation: getting bonus money made us poorer. I know, I know, that sounds ridiculous. How could getting money outside of your regular income make you have less money? Here’s how it worked for us.
How This Situation Plays Out
For instance, let’s say we found out we were getting a bonus of $1,000. The money usually did not come immediately—we knew it was coming, but we wouldn’t get it for a few weeks. Somehow, in anticipation of that money, we (mostly me) would loosen our budget.
I would think of things that we need that we put off because we didn’t have enough money:
- a new window for the bathroom since the seal was broken,
- a little road trip to go see family that lived out of town,
- new business clothes for my husband for work, etc.
There’s no problem with thinking about these items and planning to utilize the extra money. However, we would go ahead and act. We’d shop for and buy my husband’s new clothes. We’d take that road trip, and maybe we’d spend more on the road trip than we planned because, hey, we had extra money coming in.
How Getting Bonus Money Made Us Poorer
Spending extra money before it was actually in our bank account was a problem, but so were these unexpected factors:
We’d Spend More Than We Were Getting
First, we would spend the money before it even arrived. However, even worse, sometimes, we’d spend more than the amount we were getting! I remember a Roseanne episode about this, “We’re in the Money.” Dan was getting a $500 advance, but secretly, Roseanne and Dan each spent the money, so they were actually in the hole after they got the bonus money. Even though we don’t have a sitcom about our lives, we have lived that episode many times.
Sometimes the Amount Would Be Less than We Thought
Once, my husband was getting an unexpected $1,000 from work. We waited and waited for the money, and then, impatient, we started spending it. However, once we had the money, we were dismayed that it was only $700 due to taxes, retirement, and social security withdrawals. Not only had we spent the entire $1000 before it came, but when the money came, it was $300 less than we thought! Our behavior regarding getting bonus money made us poorer!
We’d Pay Interest While Waiting for the Money to Come In
Finally, we’d spend money as soon as we knew we were getting it, even though we may not physically have the money for several months. Once, we discovered that my husband was receiving a significant raise, but due to how slow his employer processed paperwork, it was almost six months until that raise came through! Meanwhile, we had loosened our budget and spent more than we earned. As a result, we had to pay credit card interest on those purchases until we could pay the cards off with the increased salary.
Final Thoughts
Bonuses and raises can help you improve your standard of living, save, and invest more. However, learn from our mistakes. Don’t plan for the money or spend it until you receive it.
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Melissa Batai
Melissa is a writer and virtual assistant. She earned her Master’s from Southern Illinois University, and her Bachelor’s in English from the University of Michigan. When she’s not working, you can find her reading a good book, cooking, or traveling. She resides in New York where she loves the natural beauty of the area.
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