Google is delaying full year-end bonus checks by a few months, showing a fundamental rule of personal finance at the same time: Never depend on the money you don’t have on hand.
“If you know money’s coming down the road, you can think [about] what you might want to do with it, but don’t have it spent before it gets there,” Life Planning Partners director of financial planning and certified financial planner Carolyn McClanahan said.
Change to Google Bonuses Indicating Uncertainty for 2023?
According to a memo acquired by CNBC, Google employees eligible for bonuses will receive 80% of the total in January and the remaining 20% in March or April. That differs from Google’s custom of sending out complete checks in January. According to a Google spokeswoman, the change was “extensively” discussed.
Google made its planned 12,000 layoffs public on Friday.
This year, several businesses have also altered or reduced bonus payments.
According to reports, Goldman Sachs reduced junior bankers’ bonuses by up to 90%. The investment bank announced job layoffs earlier this month for up to 3,200 workers or 6.5% of its staff.
According to Gusto, a payroll provider, small businesses reduced 2022 bonuses across all industries by 9.7% to an average $526, down from $582 in 2021. They experienced the largest decline (by 10.7%) among financial institutions, legal firms, and other “professional services” providers.
“As companies prepare for what 2023 has in store, they handed out smaller end-of-year bonuses to close 2022,” Gusto economist Luke Pardue mentioned in a recent report, pointing to an uncertain economic outlook for this year.
As previous examples from businesses have proven, there is typically no guarantee regarding the timing or size of year-end bonuses. Therefore, employees should refrain from spending money they do not yet have but expect to receive.
Although it may seem like common sense to wait until you have a windfall before spending it, she said many employees really fall into the trap of overextending themselves.