I've been at places where you get bonuses and me and the wife always call it "magic money". We don't bank on it and we try to pay down debt or invest it.
We had a quarterly cash bonus program that was variable based on company performance. In the fastest-growth times, it often paid out at the cap (250%). After one such payout, my neighbor stood up and theatrically loudly exclaimed, "I have no idea how this gets determined; I've just been strongly incentivized to act randomly!"
I've had that experience too. I've gotten a big raise, a promotion, and a tiny raise all off an employee "report card" that has had the exact same letter scores each time to the point I think the majority is copy pasted.
Yeah, that is the smart way to do it, but as I learned, very few people treat it that way.
I know that sales people usually are smart enough to "live off the base, play on the commission", but that's because commissions are quite variable. When you get a fixed bonus every quarter, it starts to feel very much a forgone conclusion.
Same. My wife and I actually live within the lowest salary between the two of us so we have no stress even if one of us loses our job. We have an emergency fund and invest the hell out of the rest of the money. That means the second salary is like a year round bonus, which lets us take nice vacations, buy our kids nice stuff, buy nice cars, pay for our kid's college when that time comes, etc. Our actual bonuses go into the year round bonus fund.
In my case, the bonus is based on company revenue goals. And it's small (relative to salary). So, I ignore it. It does nothing for my motivation. As a line manager at a large company, in a non-customer facing business unit, I don't have much impact on revenue (I can't bill more hours or sell more units). My personal goals have very little impact on the bonus. If my bonus wasn't part of my stated comp plan (ie, it only paid on years where revenue was actually good), I would appreciate it more. As it is, it doesn't factor into my daily thinking at all.
Wife's bonus can be considerable. And it varies by a huge amount (low end 8% of salary, high end ~30%). It's more of a motivation for her - the high end is based on her performance, not company metrics she can't impact. Of course, if she busts her ass and doesn't get the high end, she is miserable until the next cycle. Hasn't happened yet, but two years without the high level and I bet she looks elsewhere.
We're fortunate to be able to budget and live within our means without the bonuses. At lower salary levels, in a high COL region, that might not be easy. Like you, we either use them to pay down student loans, pay off cars, or go on a more extravagant vacation than normal.
