How to Make Best Use of Your Bonus

How to Make Best Use of Your Bonus

With Deepawali festivities just over majority of salaried individuals must have received their Diwali bonus or advances and surely finished them. While some must be waiting to get their year end or annual performance bonus. Diwali bonus, New Year bonus or annual bonus; who does not like receiving extra money? But the question is how many make the best use of this extra money?

The amount of bonus received could vary individual to individual. Instead of saving or investing, many spend it on unnecessary items like phones or electronics. Wouldn’t it be wise if you could spend it wisely for a better and financially secure future?

Here are a few ways in which you could utilize your bonus in better ways.

• Pay off Debt: The best thing you could do with that extra money is to pay off your debts partly or fully. Regularly pre-paying long term loans like home loan can substantially cut down the tenure and reduce the interest payout as well.
• Build your emergency fund: If your emergency fund is not in place or is inadequate; you could utilize the bonus amount to create or supplement that much needed emergency fund.
• Invest for short term goals: If there is any goal like home renovation or buying a car which you are planning to achieve within three years, then utilizing your bonus to fund these goals can help achieve them faster. As these goals are short term you can invest the bonus received, in shorter term and relatively less risky instruments like fixed deposits or debt mutual funds.
• Invest for Long Term Goals: Goals like children’s education; their marriage etc. require huge savings and investments. Investing your bonus in equity or equity mutual funds can help supplement and grow these savings
• Invest in yourself: Most people perhaps ignore to invest in one most important asset i.e. their own selves. Your bonus could be put to good use to up-skill yourself. To keep ahead and grow in this competitive world, you could use the bonus for new learning and development programs to update your knowledge and acquire new skills.
• Save for next vacation: You could use this money for annual vacations instead of cashing out your investments.
• Maximize your retirement savings: Retirement is that phase which marks a new beginning in the life of every individual and needs to be thoughtfully planned. By infusing your bonus into your retirement savings annually you can probably achieve this goal faster.

To sum up…

Receiving bonus definitely is a treat; so instead of spending it on wasteful expenses try utilizing it to make your future better and financially free.

Learn stocks trading course, derivatives and trading strategies from sharekhan Education’s online Mastering futures and options trading course.