Learn How to Spend Your Annual Bonus Wisely

 

About 77% of businesses in India offer variable compensation programs to their employees. This is usually coupled with bonuses or compensations that tend to come around the holiday season or by the end of the year. This means that many of you are in for a great supplemental check pretty soon.

So, how are you planning to spend it? Are you looking to buy the new iPhone? Or preparing to fly to an exotic destination with your family? To tell you honestly, these are all great ways to spend that extra cash; after all, you are entitled to your share of fun. But, excessive spending may not prove to be a productive way to blow your hard-earned money.

The key is to spend your yearly bonus wisely by restricting yourself from spending it on a few conspicuous items. You have to learn how to budget bonuses and invest them to create something valuable for yourself and your family.

To help you accomplish this, we have listed a few smart ways to invest your yearly bonus on things that ensure your safety and your family's well-being in the long run.

Pay Off Your Sticky Debts ASAP:

This year, let debt closure be your priority. For the past few months, if your rising credit card bills and your personal loan EMI have been worrying you, then why spend your bonus on anything else? Use that extra cash to pay your outstanding credit card bill amount or consider utilising the money to pre-pay your personal loan.

Bring Joy to Your Golden Years:

If you haven't started planning for your retirement yet, there's no better time than the present. The bonus gives you a great opportunity to find the right investment avenue for your money to secure your life after work. Even if you've already started your planning, the money you receive through your bonus could boost your overall corpus, allowing you to enjoy your retirement further. Plus, the more you put away, the more chances you have of opting for early retirement.

Invest in a Medical Insurance Plan:

Life is unpredictable. While everything may be great right now, we can never tell what surprises the future may bring. Therefore, it is best to be armed with plans that protect us and our loved ones. Instead of spending your money on something that will bring you joy momentarily, invest in a good medical insurance policy for life-long peace of mind.

Boost Your Emergency Fund:

Remember Uncle Scrooge? He did not end up with a room full of gold by spending money on just about everything. Instead, he worked hard and saved harder. You can do that too. Use a part of your bonus to create or enhance your emergency fund. While an emergency fund won't give you handsome returns, it will surely improve your risk appetite. For example, if you want to move abroad or start your own business, you will have the luxury to fall back on your emergency fund without finding the need to stick to your old job.

Invest in Your Family's Future:

One of the most important things you should do with your bonus is to invest in your family's financial future. You may not want to think about a time when your family will have to manage without you, but none of us ever really know what life has in store for us. A devastating accident could leave your family struggling without you in their lives anymore. By opting to go for our term plan, HDFC Life's Click 2 Protect Life, you can make sure that your family will always be looked after. Apart from providing life cover, this plan also offers some financial stability when you're dealing with life-changing events like a critical illness or a disability. Remember, when it comes to investing for the future, your family should always come first.

Set Aside Money for Big Purchases:

There are bound to be big purchases in the future. You may need a house, a car or even a vacation. These things tend to swallow a big part of your income. By putting a little bit of your bonus aside, you can help fulfil these dreams with ease.

Invest in Yourself:

And lastly, invest a small part of your bonus on yourself. Enrol in a course of your choice, invest in a book or attend a work-related conference. Educating yourself and exercising your brain may not be able to reward you with material items, but they will give you something very valuable.

Many of us feel the urge to reward ourselves by spending our bonus on trivial items that make us feel happy momentarily. Instead, by thinking about how we spend our money and by investing it wisely, we can create a secure financial future for our loved ones while also achieving our long-term goals. Find a way to make your bonus work for you. And make it work hard.

Click HDFC Life Click 2 Protect Life to know more about how we can make your family secure.

ARN: ED/11/19/16702