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AxisDirect-O-Nomics
Apr 16, 2019 | Source: www.financialexpress.com
Performance bonus is given to an employee or a department for achieving or exceeding particular goals. If you are also eligible for a performance bonus, you might have got the amount or a part of it depending on your performance. In case the bonus is added to the salary for the month of March, it might have got transferred to your account along with the salary. Sometimes performance bonus is also paid separately to highlight the performance of employees or is added to the next month’s salary.
Whatever may be the timing of getting the bonus, the question is how to put the money to its best use. Either you may casually throw a party or lavishly spend the money or you may use it judiciously to make your life smoother.
Here are some tips to utilize the money in the best possible ways.
1. Save for contingencies
You should build an emergency fund by keeping the money needed to meet at least six months’ expenses in liquid mutual funds to meet unforeseen contingencies, if any. If you don’t have sufficient money in an emergency fund, use a part of your bonus money to cover the gap.
2. Prepay debt
Use part of your bonus money to prepay your existing debt, if any, or invest to build a corpus that you can use to pay off any future debt. Prepayment will help you minimize what you currently owe and developing a corpus would lighten the burden of taking loans, which would help you save on hefty interest payments.
3. Contribute in developing retirement corpus
The length of retired life is almost as long as a person’s working life. Moreover, inflation makes living after retirement more expensive. So, it is better to contribute as much as possible to develop a sizable retirement corpus to sustain without a regular flow of salary. Apart from starting early, whenever possible, make additional contributions to develop your retirement corpus. So, invest a part of your bonus to make your retired life smooth and comfortable.
4. Invest to fulfill life goals
Use the money to start investing or add to your existing investments to develop corpus to fulfill your life goals like education of your children, their marriage, buying a car, building a house, to enjoy vacations etc. Build separate corpus for your short-term and long-term goals through suitable investments.
5. Spend for self development
Health is wealth. So, spend some of the bonus amount to join a gym and/or spend some amount for skill development. It’s very important to stay fit to enjoy whatever you do and develop skills to keep pace with the ever-changing nature of work.
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AxisDirect-O-Nomics