May marks the favourite time of the year for many workers in the Netherlands: the vakantiegeld (holiday pay). It’s 8% of your gross annual salary that your employer accrues throughout the year and pays out in one go — usually between May and June.

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For a gross monthly salary of €3,000, that’s approximately €2,880 extra hitting your account all at once. The question is: what do you do with that money?

The most common answer is to spend it on holidays — and there’s nothing wrong with that, that’s what it’s for. But if your holidays are already covered or you want part of that money to work for you, here are 5 options ordered by long-term financial impact.

Do you want to first understand exactly how it’s calculated and when it arrives? We explain it in The vakantiegeld in the Netherlands: what it is and how much you receive →

First of all: do you have an emergency fund?

If you don’t yet have 3 to 6 months of fixed expenses saved in an accessible account, that’s the first destination for your vakantiegeld — no discussion. An emergency fund is not an investment; it’s basic financial infrastructure. Without it, any unexpected expense (car, health, job) sends you back to square one.

Already have one? Then keep reading.

Option 1 — Save it in an account with real interest

If you know you’ll need that money in the next 1-2 years, the best option is to keep it in an account that actually pays you something. Your main bank probably gives you between 0.5% and 1.25% interest. But there are alternatives in the Netherlands that offer up to 2.80% with complete security.

You can compare the best options in our guide to banks with the highest interest rates in the Netherlands. If you want to maximise without complicating things, Raisin gives you access to Europe’s best deposits from a single account — some exceed 3% for short terms.

Option 2 — Invest it in ETFs

If you have a horizon of 5 years or more and don’t need that money in the short term, investing it in index funds (ETFs) is probably the decision with the greatest long-term financial impact.

€2,880 invested in a global ETF at 8% annual return for 20 years turns into approximately €13,400. You don’t need to know about the stock market or choose stocks — an ETF tracking the world index (like the MSCI World) does the job on its own.

You can start from the Netherlands with Trade Republic — with no purchase fees, automatic investment plans, and 2% interest on uninvested cash. Do you want to see how much your vakantiegeld would grow over time? Check it out in our compound interest calculator →

Option 3 — Contribute it to your individual pension

This is the most undervalued option — especially if you are self-employed (ZZP’er) or if your employer doesn’t have a good pension plan.

In the Netherlands, you can open an individual pension account (lijfrenterekening) and what you contribute is tax-deductible. Depending on your tax bracket, the Belastingdienst returns between 36% and 49% of what you’ve contributed. In practice: if you contribute €1,000 of your vakantiegeld, the State returns up to €490 in your annual declaration.

The most popular platform among the Latin community in the Netherlands is Brand New Day — index funds, low costs, and a 100% online process. You can read our full experience in My Brand New Day account →

Option 4 — Pay off part of your mortgage

If you have a mortgage, it might make sense to use your vakantiegeld to make an extraordinary repayment (extra aflossen). You reduce capital, future interest, and your monthly payment.

But beware: it’s not always the best decision. There are specific situations where it’s better not to make extra repayments — when your interest rate is low, when you would lose the tax deduction for interest, or when that money performs better invested. We explain it case by case in Should you make extra mortgage repayments? In these 5 situations, it’s better not to →

Option 5 — Spend it (with intention)

The vakantiegeld exists for a specific purpose: holidays. If you’ve been waiting for months for that trip or a few weeks of rest with your family, spending it there is perfectly valid — as long as the rest of your financial situation is in order.

The best financial decisions are not the most austere, but the most conscious ones. Knowing that your emergency fund is covered, that something is invested, and that you allow yourself a break when you can — that’s a good relationship with money.

Where to start if you’re not sure what to do?

A simple strategy that works for most:

• No emergency fund → everything to the emergency fund first.
• With fund but no investments → part to ETFs, part to enjoy.
• Already investing regularly → consider the individual pension for the tax advantage.
• Have a mortgage → read up first on whether it’s advisable to make repayments in your specific case.

What will you do with your vakantiegeld this year? Tell us in the comments 👇