It’s not quite usual to see the mail that certain extra amount added to your usual salary and credited to your account. A bonus is something that you deserve for all the hard work this year. ‘Time for celebration’ is the first thing that will strike your mind. But whenever a large sum of money is added to your wallet, you need to have a plan for it even before you think of a mini celebration. Excessive spending isn’t the smartest way to handle your bonus. However, allowing your money to work for you smartly is the way to go about it. So here are some of the meaningful ways to use your annual bonus money.
1.Invest in yourself
With the rising competition, self-development at any point in your career will help you stay on the floor. So, your bonus money to learn a new skill sounds like a great idea. Something which could be relevant to your job or an area of personal interest, such as advanced use of Excel an advanced course, etc. It could be anything! Basically, anything you’ve been putting off for the longest time. Having said that you can also learn new things that you are passionate about, it could be learning a new instrument or learning photography skills. All this would boost your confidence and help you grow professionally and personally.
2.Start an Emergency fund
Nothing in this world is permanent or guaranteed and it’s always wise to be prepared for the unexpected. Let’s say your salary takes a hit or your car breaks down or a family member gets hospitalized. To take care of these unexpected events, it is important to have an emergency fund. If you still have not created a separate fund for emergency then, you certainly need to create one with the help of the bonus amount received. Experts agree that it’s smart to have three-to-six months worth of savings tucked away, or even more, to help protect you in case of disaster. So you can utilize this amount to get closer to this goal.
3.Pay-off earlier debts
It’s kind of a good idea to get rid of financial obligations. Debt priors the list and it should also be amongst your top priorities when you plan to utilize the bonus. Debts like credit card dues, personal loans, business loans etc. should be repaid especially the ones that bear very high-interest rates. Repaying the debts benefit you many ways in return, it helps you save a lot of interest payments, improves your credit score making way for obtaining further loans in the future.
4.Invest to earn
A long-term investment pays off well. There are multiple options where you can invest your money. You can utilize the amount to purchase stocks or lump-sum mutual funds. Planning for no-risks attached, then opt for long-term investment options that offer not just tax deductions but also tax-free returns. Other options are, consider locking up the money in a fixed deposit.
5.Fund your retirement goal
Apart from the above-mentioned investment options, you can consider parking bonus money in a long-term financial instrument such that the benefits can be reaped post-retirement. Even though retirement often looks like a far away event, the earlier you start saving, better is the retirement benefit you can enjoy. Your older self will thank you for taking such a wise decision. A lot of retirement plans are available in the market, so choosing an appropriate one won’t be a problem.
Find a way to get paid for doing what you love. Then every paycheck will be a bonus – Oprah Winfrey
What are your ways to utilize a year-end bonus? Did you follow any of the above-mentioned ways?