Diwali means spending lavishly on clothes, firecrackers, buying favourite gadgets or cars and purchasing gold. Diwali brings cheer and joy along with a little extra money in the form of a bonus for the employed. We plan many things around this amount, which we get once a year. Some spend it all, and others invest it and keep it aside for an emergency.
It is a bonus for all the hard work you have done during the year and hence this money should be spent wisely and effectively. It is not important how big or small the amount is; you can make the most of the money with good planning. Here are a few tips, which can come in handy:
Clear some of your debts: If you have taken personal loans, credit card loans, or any short-term loans, then this is the right time to repay your debt. If you have taken a home loan and have EMIs, you can use the bonus to pay up a part of your outstanding loan. This way, you can pay off a portion of your loan, which will help improve your finance by not paying excessively high-interest rates for years.
Gift a secured retirement to yourself: We spend a lot of time and money thinking about what to gift to our loved ones. Though material gifts provide instant gratification, they have a limited shelf life. So, why not gift yourself something that will be usefull after your retirement? For a better life post-retirement, it is better to contribute as much as possible early on to develop a sizable corpus to sustain without a regular flow of salary. It would be a good idea to invest a part of your bonus to make your retirement life smooth and comfortable.
Build your emergency fund: The pandemic has made people understand the importance of an emergency fund. It refers to the money you keep aside to cover unexpected expenses when there is no regular source of income, or you need more than what you have saved in FDs and saving accounts. You can also save this money for medical emergencies. This amount should be parked in such a place from where you can withdraw at short notice.
Plan a future for your children: Apart from probably indulging kids by buying them firecrackers and new clothes and toys, you should plan their higher education or spend on their skill development programmes. You can also enroll your child in sports training and outdoor activities that will help them build team spirit and focus on overcoming challenges.
(The writer is Co-founder and CEO of EarlySalary)
