My pay has two parts: base salary and bonus. I treat them very differently. One keeps the lights on. The other builds the future.

Base pay is the foundation

Around 65 percent of my income comes from base salary. My wife’s is more weighted to her base. Our basic salaries cover everything: bills, savings, childcare, mortgage. We designed our life around that number. I’d rather underspend on my base than assume a bonus that might not come. We would prefer to have everything “core” under 1 basic salary, but with a recent move and childcare we’re a long way from there right now. It happens – our industry cuts jobs frequently. If we lost one income we’d be fine for a bit but we’d need another income soon. If that job didn’t pay a bonus or just my current employer had a poor year and didn’t give me one (bad years happen!), I don’t want to be in a panic. It probably goes without saying, I don’t treat any income/gains in my savings as spendable income. I’m not financially independent and I want to be, so anything saved is just that.

Bonuses go to savings and goals

When bonuses come in, we allocate them to what matters. For a few years, I maxed out pension contributions to use carry-forward allowances and capture the NIC top-up. Recently, we’ve used bonuses for house projects, a renovation and garage conversion. Going forward, I expect we’ll split them: part into capex, part into long-term savings. I’m shifting out of my pension to focus more on the short-to-medium term.

Windfalls are treated as windfalls

I’ve received a retention bonus once after my employer sold themselves to a larger US headquartered firm. It was a surprise, and I don’t expect it again. I’m technically eligible for carry, but the funds are underwater and the allocation is tiny. If something ever comes of it, great. But I don’t plan around it.

Gross vs net: it’s complicated

This is one of those deceptively simple questions that gets messy the deeper you go. When calculating my savings rate, do I use gross income, or net income after tax? Do I include gross pension contributions, or treat them separately? Should I factor in employer contributions at all?

There’s no right answer. If I calculate it using take-home pay only, I get one number. If I include my gross pension contribution, I get a different one. If I back-calculate what I would have had post-tax and NI had I taken the income and saved it in an ISA instead, that gives yet another figure.

At one point, I had three versions of my savings rate written out – one prudent, one generous, and something in between. Depending on how you slice it, I’m typically somewhere between 30 percent and 50 percent.

Ultimately, I don’t obsess over the number. I ask: am I saving in line with my values? Am I making progress toward long-term flexibility? Am I using the tools available to me – salary sacrifice and ISA’s in a way that’s directionally right? That’s enough.

The calculation isn’t useless, but it can’t drive the whole plan. The plan is based on doing what you can and having a sense for where that will take you and over what timeframe. A high savings rate with no joy or flexibility might get you to the number faster – but at what cost? I high savings rate because you chose to use a different metric? That means absolutely nothing. I’d rather save consistently, review regularly, and trust the compound effect over time.

No regrets, but plenty of lessons

I try not to live with regrets. When I spend, I try to align that spending with what mattered to me at the time. But that doesn’t mean every choice was perfect.

We spent part of a recent bonus rewiring the house and installing a Unifi internet system with CAT 6A cabling. It was, in theory, a future-proofing move. We wanted faster, more stable internet, especially with more devices and work-from-home setups. It technically worked. We now have better coverage and high-speed access points across the house.

But the system has been fiddly. I don’t fully understand it. Things break. It’s added a layer of complexity I didn’t expect, and I sometimes miss the simplicity of just plugging into a router and calling it a day, granted I don’t miss all the Virgin Media boosters I needed and that it was 1/7th of the current speed. For the cost and stress, I’m not sure I’d do it again. It wasn’t a disaster, but it wasn’t the friction-free upgrade I had in mind either.

Still, I learned something. I learned that tech solutions aren’t always set-and-forget. I learned to sanity-check convenience claims. I learned that a bonus gives you room to make imperfect decisions without jeopardising your financial goals. That kind of safety net – to experiment, fail, and still move forward is part of why I treat bonuses differently.

Conclusion: Base keeps us steady, bonus builds our future

Treating base and bonus separately has been a foundational part of our financial strategy. The base salary covers everything we need to live, and live well, while the bonus is used to move the needle, whether through savings, pensions, or big one-off expenses.

It creates psychological clarity. We don’t get used to the bonus. We don’t need it to keep the house running. That means we’re free to use it deliberately. And when something goes wrong, it’s okay. We planned for that.

That split, security from the base, progress from the bonus, lets us stay grounded in our day-to-day finances, while still making progress on bigger goals.

How do you treat your bonus – as freedom, fuel, or something else?