10 Tips to Use Your Annual Bonus Smartly
Bonus is always the Best and Happy thing in any organization. But this is the time when you should act more smartly to use this unexpected money wisely. Mostly people tend to use such bonus carelessly in buying gifts or in vacations and fail to make proper utilization of such onetime extra money that can otherwise be used to enhance their financial condition. After all such bonus money is your reward for your past 12 month’s hard work, so if you use it wisely you can see it continue to reward you over the next 12 months and beyond. So here are some quite useful tips to use this money prudently without wasting a single penny.
- Use the fund to cut high-cost debt:
You can always use this good amount to repay your high-cost debts such as credit cards, any loans as personal loan, auto loan, home loan. The home loan prepayment can be beneficial if you repay some amount at the initial stage where principal amount is much higher. But never prepay the home loan if need some big amount in near future, instead you can use this bonus for the same. Therefore there may not be any need to take another home loan with high interest rate.
- Always consider your family and yourself:
It is very obvious that whenever we get such extra money be it bonus, gifts we tend to do some unnecessary shopping which we may not do with our regular salary. So ultimately we loose the extra money. So to avoid such situation take aside certain amount may be 10-20 % and use this amount to do the extra shopping The balance 80-90% amount can be used for investment or some wise use. You can use balance amount for a vacation o can buy some gold/diamond jewelery for your wife. Such jewelery can be used in an emergency.
- You can try to use this fund for some tax-saving methods:
By investing some of your bonus amount in tax-saving instruments and remaining from regular salary you will feel relieved at the end of financial year as there will not be any financial strap.
- can use the bonus in some skill development:
In today’s fast moving competitive world it is a need of time to be updated in whatever field we are working. Instead of waiting for your employer to give you the required training you can go ahead and enroll yourself in the required professional training with the help of some of the bonus amount. You can also invest in some good learning material or books.
- Review and fill the gaps in your budget:
If you observe bonus is the best time to review your financial goals. Find out the gaps if any which can be filled by this extra corpus. You can always use some of the bonus amount to invest in equities which will help you to achieve your long term plans like retirement plan.
- Check your account fees:
Zero balance bank accounts are now harder to find. Banks wave off account fees if you maintain the minimum balance criteria. So if you are missing such criteria in any of your bank account use this extra money to meet your account that threshold amount. This way you can earn more as a interest on your savings instead of losing on the account fees.
- Save to buy property:
Buying a property is one of the common goals of all of us. Though there are many home loan options available in market one still has to pay initial 20-25% amount before applying for a loan. Also you will need some money for later stamp duty , registration charges etc. So you can save extra money for this work. Bonus money of couple of years will add up to a good savings which will be very useful while buying your dream home.
- Keep some amount for Emergencies:
Emergencies always come unannounced. You can keep some 10-20% of such extra amount as emergency fund that can be used in case of financial emergencies arising out of unforeseen circumstances like job loss, home repair, car repair or for any medical care for health issue. Ideally you should always keep at least 10% of your monthly salary as a emergency amount.
- Buy some Gold:
Yes.. you heard it right!.. Gold is always one of the safest instruments of investment as it never let down its owner. You can always utilize such extra money to buy some gold either as a coins or some gold ornaments to have a secure investment for future.
- Save for Retirement:
As retirement saving is a long-term goal, keep this as a last option as money becomes inaccessible for longer time. Also such bonus money are best suited for shorter, medium term goals. So first focus on above options and still if you are on the top of the ball, you can take this opportunity and invest some amount in any good retirement plan.Feeling little more confident now?.. If you follow above guidelines you will definitely feel more relax and happy.