The festive season has set in and along with celebration, comes that little burden on additional expenses we incur during this time. While a Diwali Bonus does take the edge off, a lot of people are unsure over how to put it to a good use. The most important factor to help you strategize better is to treat the bonus as a regular income, and not particularly an added bonanza which brings along with a strong urge to splurge on non-essentials.
Here are few ideas to spend the bonus amount received during Diwali wisely:
The market has been dole drums since the past few weeks; hence if you want to protect yourself from the market volatility, we suggest we shift your focus to mutual funds. Not only will you protect yourself against volatility, a periodic increase in the amount of your investments will serve you good over the long haul.
Unless you have outstanding payments or debts that you need to clear, putting your Diwali bonus into lucrative investment avenues is always the best decision and indicative of smart financial planning.
The festive season will serve as a good time to clear any impending debts you have in your kitty. Start by clearing off your credit card bills, pay personal loan and prepay any part of home loan. Prepaying a big-ticket loan such as a home loan, can help you to cut down on the tenure of the loan.
Paying off these dues as soon as possible will help you to reduce the interest burden. If you cannot fully prepay, you can at least pay a part of it using the bonus amount, as this can also reduce the interest outgo to some extent. Paying off your EMIs and clearing off your debt on time would help you to keep your CIBIL Score strong.
We generally tend to put our long-term investment goals on hold; till there is a considerable rise in salary or existing liabilities have been met. These can include long-term goals such as retirement, kids' education, investing in an asset and so on. When we receive a Diwali bonus, it is always recommended to create discipline and use it to achieve such long-term goals.
These lumpsum contributions can help to accelerate the achievement of the goals or meet any shortfalls. Remember, even though the initial savings amount may be small, over the longer term it can go a long way to bridge the loop-holes between the required amount and accumulated amount.
Generally, we spend the bonus amount on impulsive purchases. We put all our liabilities and needs aside to ensure that the enjoyment of the festival is at its peak. We suggest, you start by identifying the difference between your needs and wants. Do not get lured just because there are discount offers available. Make your shopping list. Ensure you spend only on essential gifts or purchase items which you need the most.
It will be only a month or so when most employees will have to provide proof of tax savings to their employer. And those last-minute decisions for investments leads to dip into your savings, that you have earmarked for other goals. If you are not able to do so then, tax cut from your salary in these months disturbs your monthly household expenses. A Diwali bonus can also be used for making investments in tax saving mutual funds, to ensure you receive a better post tax income in coming months and keep your finances in manageable limits.
Hence, use the festive vibes of the Diwali to let go off all your worries and stress and make the most of your time with your family, but never let go the rein on your finances – only then can you ensure that your next year is prosperous in a true sense!
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