Bountiful Bonus: Making the best of it!

2-minute read

Efficient handling of your bonus can raise your overall financial position and hence, it deserves proper attention.

Here are some steps that you can take for efficient utilisation of your bonus:

Pay-off or part pay your debts

The virtual world presented by social media platforms might affect how we view life. The aspiration to mimic influencers and keep up with online celebrities can often push individuals to adopt spending habits that might exceed their earnings and make ill-advised financial decisions.

After paying part of the debt, one can use the 80:20 rule for other expenses, with 80% of the rest of the amount going to investments, savings etc. and the remaining 20% for celebrations.

Save for a rainy day:

You can use the bonus to create an emergency fund (equal to 6 months’ worth of expenses) by investing in a liquid mutual fund or opening an FD.

Invest in your future:

Bonus gives an opportunity to invest large lump sum amounts in financial instruments that can grow your wealth. It is also the right time to re-balance your portfolio and put your money in investments that are under allocated.

Tax planning:

Yearly contributions can be upfront in instruments like PPF, NPS and SSY, so that you earn interest or market returns for the entire year and avoid the last minute rush in choosing the tax saving option before the year ends.

Protect yourself:

Bonus can be used to purchase, reassess or upgrade existing insurance covers in line with the increased income and improved lifestyle.

For e.g.:

For a ₹2 crore Term Life cover (valid till 85 years) of a 35* year old male, the annual premium is approximately ₹45,000 per year and can be a part of Section 80 (C) tax benefit.

To know your premium

Invest in your career:

To stay relevant professionally, you have to continuously keep learning and acquiring new skills. Enroll for courses which require upfront fee payment with your bonus.

Celebrate your hard-earned money:

It is time to celebrate your success with loved ones. Make sure to avail the best offers on dining and travel with your Credit Card & Debit Card.

Thus, by leveraging your bonus wisely, you can pave the way for continued growth and prosperity.

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APRIL 2024 | VOL. 35