THE end of the year is around the corner. Along with festive music and sugar cookies, for some lucky people the holiday bonus is an end-of-year staple.

THE end of the year is around the corner. Along with festive music and sugar cookies, for some lucky people the holiday bonus is an end-of-year staple.

Bonuses are often spent before they are received as employees anticipate payment.

With every indication that South Africans are still feeling the credit crunch, however, this year may be a good one to practise bonus restraint.

"Since this is the season of giving, your first temptation will undoubtedly be to give yourself a little something. We all deserve some spoiling, particularly when we have worked hard during the year. But wouldn't it be more sensible and create more value if you use your bonus to pay off debt and to save a little nest egg before you spoil yourself?

Start by paying off the most expensive debt first such as your credit cards and shop cards that charge the highest interest rates. Also consider keeping some money from your bonus cheque for the holiday period, as this is generally an expensive time of the year. By using some of your extra cash for festive entertainment, you might avoid getting into debt.

The main obstacle to financial security is debt. Beware of being caught in a debt spiral. You incur debt, clear it with your annual bonus, and then promptly spiral into debt again. Responsible money management requires a change of habit. It is a good idea to use cash for purchases at every opportunity.

Using a debit card for purchases instead of a credit card will ensure that you don't spend money that you don't have.

Once you have cleared your debts and are working on a cash basis, you can start thinking about investing your money for important goals, making your money work for you and not working for your creditors.

Nevertheless, always remember that the greatest gift you can give yourself is to take some extra money and pay yourself first by investing it for your future. If you invest R5000 today, it could be worth R12969 in 10 years time if it grows at an annual rate of 10percent, after all charges have been taken into account. If you do this every year, you will be amazed how much you will have accumulated over 10, 15 or 20 years.

On top of that, if you invest in a retirement annuity fund, you could find that your contribution is tax deductible, depending on your other retirement fund investments.

Paying extra money into your home loan account is another good option.

Although a flexible home loan allows one to have easy access to the money which has been repaid, a great deal of discipline needs to be exercised to avoid borrowing from a home loan to finance short-term luxury items. There is the danger that by the time one reaches retirement, one's home loan has still not been repaid. One might have to use valuable retirement capital to do so and run the risk of having an enormous shortfall in retirement.

These days you simply have to re-assess your priorities. Importantly, you should not lose sight of vital aspects such as making provision for retirement, health-care needs, saving for your children's education and protection against the financial impact of catastrophic health events.

It is important to consult with a financial adviser who will help you to structure an action plan to enable you to invest in your future while still living within your means today.

lMupita is managing director of Retail Affluent at Old Mutual