Skip to main content
First Tech Routing #321180379

Make the most of your employee bonus or unexpected income

A woman is reviewing a financial document.

Whether you’re fortunate enough to earn a bonus or you receive an unexpected income boost from a tax return or tax kicker, it’s important that you put that extra money to good use by investing in your financial wellbeing. First Tech can help you determine your next step based on where you are now and where you want to be.

We have options! You may choose a combination of these or make one decision in the short term and change your mind further down the road. For now, choose one of the following options that best fits your immediate or first goal:

Consider my tax situation

Person looking over tax documents in their hands.

No one really wants to think about taxes. But if you’ve recently received a bonus from work – or if you’re expecting one soon – it’s important to understand the tax implications before you make any other financial decisions. For example, if this bonus will mean paying more state or federal taxes than you anticipated, you can set aside part of your bonus to cover that obligation. Preparing for taxes is next-level planning. Just be sure to consult a tax professional to understand the scope of your situation and what your tax liabilities might be.

Speaking of taxes, taxpayers in Oregon will receive the biggest kicker in state history in 2024. The kicker is part of their refund or reduces the taxes they owe as a refundable credit on their 2023 tax return filed in 2024. To calculate the credit, multiply your 2022 tax liability before any credits (line 22 on the 2022 Form OR-40) by 44.28%. For many Oregon taxpayers, the kicker means they’ll receive a nice bump in income. Let us help you put that money to good use.    

Feeling pretty good about your tax situation? Check out some other ways to maximize the financial impact of your bonus.

Reduce my current debt

One good way to improve your financial situation with your bonus is to consider paying off debt. In most cases, loans and credit cards charge higher interest rates than you might earn on a savings or investment. By paying down, or even eliminating, debt you can reduce your interest expenses and free up monthly cash that may go towards building your savings.

Some things to consider: Is your goal to eliminate interest expense or reduce monthly expenses? Can you afford to pay off more than one loan? If so, which has the highest interest rate? We’ve got some debt repayment ideas and things to consider. If your bonus is sufficient to pay off the loans you’d like to eliminate, what will you do with what’s left?

Feeling confident about your current debts? Check out some other ways to maximize the financial impact of your bonus.
A woman is holding a debit or credit card in her hand while witting outside with their laptop open in front of them.

Set aside some cash for emergencies

A woman is getting out of the passenger side of a car holding crutches in one hand.

It’s always a good idea to keep about three to six months worth of expenses in liquid savings, meaning money you can easily access if you have a financial emergency. If you don’t already have that cash set aside, it may be wise to allocate all or part of your bonus to beef up your savings.

You’ll want to keep this portion of your savings in an account that lets you access funds whenever needed, like a checking or savings. First Tech’s Rewards Checking & Savings combo is a great choice, since you can stash the funds you don’t need in the savings account. Read all about rewards checking accounts and how they can benefit you. Added bonus: both accounts earn an exceptional high-yield and are fully accessible anytime you need funds.

If you feel you’re well prepared for most emergencies, you can check out our savings and investment options.

Save for long-term goals

Once you’ve reached a comfortable level of debt and have set aside cash reserves for emergencies, you may be ready to start saving for long-term goals. 

IRAs for retirement – There are a number of restrictions on IRAs (or Individual Retirement Accounts), but those restrictions can be offset by tax advantages. You’ll need to decide between Roth or traditional IRA for starters. But before you make a contribution, you’ll want to be sure you fully understand limitations on contributions as well as withdrawals and speak with a tax professional to be sure an IRA suits your goals.

Education savings – If you’re getting started early, you may want to consider a Section 529 Plan, Coverdell ESA, Uniform Gifts to Minors (UGMA), or Uniform Transfers to Minors (UTMA) account to provide funds for your child’s education. Depending on your child’s age, however, there may be other savings options better suited to meet your target date. Saving for college can be daunting, but future you will sure be glad you started. The Financial Advisors at Addison Avenue Investment Services, a division of First Tech, can help you plan ahead, whether you’re facing an unexpected job change, career advancement, family change, or other factors that might impact your financial plan. Make an appointment today.

Other savings vehicles – If you know when you’ll need the money, don’t want to risk losing principal, but still want to get a decent return, certificates might be the right way to go. Or maybe you’re not sure when you’ll need the money but still want a good return and can’t risk losing principal? A money market account may be just the account. Dividend rates are tiered so depending how much money you put in, you may earn a higher rate. Funds in a money market account can be accessed whenever they’re needed without a penalty.
 
A man wearing a cap and gown and holding his diploma and has his parents beside him.

Understand more about my non-cash bonus

A man sitting down with a financial expert.

If your employer has rewarded your performance or shared in your company’s performance in the form of stocks, you may wonder what your options are. You might receive shares of your company’s stock in the form of stock compensation or restricted stock units (RSUs).

Both options are typically subject to a vesting period, meaning there is a specific waiting period before you can sell or leverage your shares in any way. The vesting period will be specific to your company, and possibly unique to you personally. You’ll want to speak with your company benefits manager if you have questions about your stock awards and any restrictions that may apply. This is likely another good time to consult with a tax professional and financial advisor.

So many options, right? We can help you navigate and find the best solution that fits your goals. Schedule an appointment to speak with a First Tech Representative.

For specific tax advice, please consult a tax professional.

Registered address: 1011 Sunset Blvd, Rocklin, CA 95765 │ 855.744.8585

Financial Advisors offer securities through Raymond James Financial Services, Inc. Member FINRA/SIPC and securities are not insured by credit union insurance, the NCUA or any other government agency, are not deposits or obligations of the credit union, are not guaranteed by the credit union, and are subject to risks, including the possible loss of principal. First Tech Federal Credit Union and Addison Avenue Investment Services are not registered broker/dealers and are independent of Raymond James Financial Services, Inc. Investment advisory services offered through Raymond James Financial Services Advisors, Inc.

Raymond James Financial Advisors may only conduct business with residents of the states and/or jurisdictions for which they are properly registered. Therefore, a response to a request for information may be delayed. Please note that not all of the investments and services mentioned are available in every state. Investors outside of the United States are subject to securities and tax regulations within their applicable jurisdictions that are not addressed on this site. Contact your local Raymond James office for information and availability.

There is no assurance any investment strategy will be successful. Investing involves risk, including the possible loss of capital. Diversification does not guarantee a profit nor protect against loss.