Rather than splurging annual Diwali bonus money, one should learn to utilize it wisely. After all, it’s your hard-earned money, so always try to treat it as a regular income and use it smartly. Most of us splurge the money by just buying and shopping things on discounts, offers during festive season. This is not good indeed. One should always use the bonus with right planning to grow the wealth more.
Let’s reflect on few of the options on how to make use of your bonus money:
1. Keep it as Contingency Fund:
Many of us literally fail to get money during any unplanned emergencies in life. So, if you don’t have any emergency fund in your account, then it’s time to start saving. Contingency fund is something which unquestionably helps people in financial crisis during job loss, business loss, accident, health emergency or any unplanned emergencies in life. You can save a part of your bonus if you already have emergency fund. Else, you can put your entire bonus in one account and start saving. Liquid funds are better than fixed deposits in the name of emergency; as they are easy to break and use with higher returns. Try to save at least 12 months corpus as a safeguard, before you mug any financial difficulty. Ideally, one should keep 50 per cent of his or her annual salary as a corpus in emergency fund.
2. Bump Up Your Insurance Cover:
It is very important to check your investments plans and insurance riders time to time. According to the need, one can increase or change or upgrade the life and health insurance cover. If you have not taken any insurance cover yet, then this is the right time to utilize your surplus money for your health and life in better options; like term insurance for your family and a good health cover plan with more facilities. It’s okay to pay high premium amount if your insurance cover is giving you good payback.
3. Pay Off Your Old Debt:
Most concern thing is to get rid of any type of debt in one’s life. One can easily get rid of old debt with the help of bonus money. If not all debt, but can pay at least half of the money, and can get rid of old credit card payment bills and personal loan EMIs. Remember, paying off all your old debts and EMIs will help you to save from high interest rates and late charges fee. Also, you can improve and make your CIBIL score strong.
4. Accumulate For Your Retirement:
If you are comprising a financially stress free life at present without any debt, then you can easily use the bonus money to top up or add on money in good mutual funds, PPF and NPS to save good corpus for your retirement. PPF is always a good option to add money for your retirement fund. Also, one can top up or increase the SIP amount with the help of corpus money. To get tax benefits more you can invest the bonus money by locking one time in ELSS (Equity Linked Savings Scheme) for 3 -5 years, and after 5 years one can take out the money along with the interest and can do fresh investments. Same formula will be applied for the PPF account. So, for the retirement go for long term better investments and set your financial goals.
5. Give Yourself A Treat:
Remember, spending is not bad but overspending and splurging is a bad idea. After clearing all your expenses including utility bills, loan, credit card bills, EMIs and old debt; pamper yourself by buying a small gift or anything which you like to have or go for a vacation. But, before spending bonus money make sure to expand your savings. Last but not the least; after all it’s your hard earned money, and the money which you waited for one year of service. So, keep it safe and splurge smartly.