Receiving a lump sum all at once can be overwhelming. Should you spend it all on the holiday of your dreams or save it for a rainy day? Here are a few important things to consider, which will help you make the most of your much-needed bonus.

A big bonus should be treated as just that – a welcome, unexpected sum of money. The biggest mistake many people make is overspending in anticipation of receiving a bonus to cover their debt. In this uncertain economic climate, anything can happen. It could be less money than you expected if your department didn’t reach its targets, or your company may not be in a position to give out bonuses at all. For this reason, it is safest to only spend your bonus money once it has arrived in your account.

READ MORE: Moneyversity: making money management fun for millennials

Once you receive your annual bonus, take the opportunity to assess your financial commitments and see what you can improve on. Maybe you can put some money aside for school fees or pay off monthly debts such as your car or home payments. Putting a lump sum into these financial commitments will take the pressure off your month-to-month payments, allowing you to take financial pressure off in your daily life. Once you’ve filled these financial gaps and boosted your own financial position, you can then buy yourself a few well-deserved treats!

Sometimes it can be better to diversify the channels in which you place your money. While it is most common for financial advisers to advise you to pay off any debt with a large sum of money, there are alternative points of view. Instead of tackling debt tied up in their bond or car payments, some may choose to put the money in an investment account that will allow it to accumulate interest and grow their wealth. The best way to make this decision is to compare the interest rates of your debt versus those of an investment account and see which one allows you to accumulate the most savings.

READ MORE: Money tips for first-time international travellers

Ultimately, because everyone’s financial situation is different, there is no magic number when it comes to how much you should save and how much is left just for you. The best thing to do is to stick to sound financial principles of saving money until you are in a comfortable financial position to enjoy any expenses. While it may not seem that exciting, your joys will feel so much greater when you are in a strong financial position. The most important thing to remember is to never hesitate getting in touch with a financial expert. Growing your wealth is not complex – it is merely a case of understanding a few simple financial principles and being disciplined with the money you have. Behind the smoke and mirrors, it’s just rands and cents.

By Jo-Anne Bailey, Sales Director & Country Manager for Africa, Franklin Templeton Investments