Bonus Tips: 5 Ways To Make The Most Of Your Bonus.

Receiving a salary bonus is definitely a pleasant event. Here are 5 tips for you to put it to the right use.

The annual performance bonus is an important component of one’s salary. If you’ve very recently received your bonus or are due to receive it in some time, today we are going to discuss 5 ways how you can use your bonus amount better to fortify your financial castle and create a corpus for your financial goals. So, read on…

Tip #1: Buy the right insurance covers

Many times, insurance purchases are held up during the year because of want of sufficient funds. Not having basic insurance covers like life, health and disability insurance are crucial gaps in the portfolio. Annual bonus gives you once in a year opportunity to purchase these covers and also to re-think on your insurance requirements to check if a particular cover needs to be beefed up.

Tip #2: Pay off your outstanding liabilities

Make a list of your outstanding liabilities. As far as home loan prepayment is concerned, it can wait as you get tax breaks on it every year. But the real liabilities you would want to kill with your bonus are things like credit card outstanding, personal loan and car loan. While closing a loan, don’t forget to obtain a closure letter from the bank to avoid any future issues.

Tip #3: Add bonus to your contingency fund

Most people forget to create a decent emergency fund which can come to use in case of a job loss or a medical emergency. So, use your bonus to create an emergency fund which is not less than 6 months of your fixed monthly obligations in the form of your monthly expenses + any loan EMIs. Invest this money in liquid plans of mutual funds which carry negligible risk and do not impose any exit load.

Tip #4: Invest for your future

Your financial success to a great extent depends on how much you can delay the gratification into the future. While a common excuse for not investing all through the year is that expenses are so high and all that, investing a good part of your bonus for your financial goals can bridge this gap and help create a good nest egg over a long period of time. Given its low-cost nature and high flexibility, you don’t need to look beyond mutual funds for your investments. So, this time, invest a good part of your bonus for your financial goals & see your money grow.

Tip #5: Invest in your career:

One of the most important aspects of your financial planning is your “income”. In the long term, your income depends on the amount of value you create for your company and clients. This value-add depends on your knowledge, experience and skills. So, this is a good time to identify the gaps in your current skill profile & use some part of it towards taking some certification courses that can enhance your prospects and further your income.

Click Here to know more about what you can do to put your increment to right uses.