5 Smart Ways to Spend Your Diwali Bonus
Besides lighting diyas and exchanging gifts with your family and friends, Diwali also brings cheer in the form of bonuses from work. This is a joyous occasion for the employee class, as the additional money is an opportunity to employ the money well. So what would you like to do with the extra money? Do you spend it on shopping and buying gifts or do you allocate it in different investment avenues? While it’s okay to splurge a little, this money should be wisely used to help you reach your long-term financial objectives.
Here’s a look at what you can do with the Diwali bonus:
Invest for Long-term Objectives
Diwali is a time for festive cheer. Wouldn't it be good to turn the cheer of today into more cheers tomorrow? A good way to spend your bonus money is to use it to achieve your long-term objectives. If you have children, think about investing in child plans that pay out during key milestones of your kids’ lives. For other long-term objectives like planning your retirement or buying a house, invest your bonus money in appropriate asset classes that will help accumulate the required corpus, for example, SIPs or equities or FDs. Although Diwali bonuses are easy to simply spend and forget, the fact that you are reading this blog post means the bonus is not necessary for you or your family to survive. So, invest now and reap the fruits later. After all, as smart Indians, we need to make hay while the sun shines.
Buy Health Insurance for a Loved One
Costs of medical treatments are shooting up rather alarmingly with each passing year. It thus becomes essential to have adequate health cover in place to meet this cost, especially for your elder parents. What's more, health plans have to be renewed annually. If you sync the renewal with Diwali every year, you not only realistically return the love and care your parents have given you, but you also save tax under Section 80D.
Build an Emergency Fund
In case you haven’t created an emergency fund yet, consider using the Diwali bonus you have received to make one now. Only break into this fund when you have to meet unplanned financial emergencies. If you already have such a fund in place, you can use the bonus money to grow your fund. Experts suggest a fund of 6 times one's monthly salary is good enough in emergencies.
Pay Off Any Pending Debts
If you have taken a loan, then repaying it should be a priority. The lump sum you receive in the form of bonus provides a good opportunity to bring down your liabilities. If you have pending credit card debts, now is the time to put your bonus money to good use. In case you have a series of debts to repay, it is recommended that you first take care of those that have high interest rates.
Buy a Term Plan
With a term plan, you can be sure that your family will be financially secure even after you are gone. Term insurance plans do not cost much and their coverage amounts are very high.
This Diwali, consider using your hard-earned bonus to save for your future. Strike a balance between spending on things that provide immediate gratification and those that will help meet your long-term financial goals.
We hope this festival brings you lots of love, joy, and prosperity. Happy Diwali!