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Make good use of your bonus

Often, ensuring a secure financial future is the best way to enjoy a bonus

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When our phones beep at the beginning of the month, with the news of our salaries being deposited into our bank accounts, nothing can bring a bigger smile to our faces than the news of a bonus.

Whether it is your annual bonus or a surprise monthly bonus, the additional financial income is a great asset and can be used in multiple ways to help further your financial goals and make you more secure. While it can be alluring to spend all of your bonus in treating yourself as it is “additional income”, there are ways in which you can enjoy your bonus, while also multiplying it.

Cushion your emergency fund

Getting additional income is the perfect opportunity to fatten up your rainy day fund or set up one if you don't have one already. A general rule of thumb is to have enough in your fund to be able to cover three to six months of expenses, including EMI payments, rent, school fees or any other considerable expenses. This will certainly vary depending upon the number of family members you support, your insurance expenditure and other factors, but one can never be too cautious in saving up for a bad day.

Secure your future

At the end of the day it is important to remember that your bonus is a reward of the work you have been putting in. While it may seem very appealing to spend and enjoy it all on yourself and your loved ones, often this can be done in the form of securing your financial future. A bonus is merely another form of income. It can be put to better use by paying off some debts or investing in an insurance plan. Often, ensuring a secure financial future is the best way to enjoy a bonus.

Invest in yourself

Remember those New Year resolutions you made at the beginning of the year? Maybe it was to join a gym or a wellness group, or to take more vacation time. Your bonus is the perfect opportunity to invest in yourself and your goals, if you take the time and invest money into your goals, and make yourself happier and healthier, you will certainly reap benefits of the same down the road.

Take risks

It might seem lucrative to invest your additional income in your pre-existing investment portfolio which is medium risk and gives your medium rewards, but a bonus is a perfect opportunity to dabble into the hot market and make a few risky investments as your financial plan is already secure and on track. Make sure you check on your long-term investment plans and make sure everything is in place before making such a move. You may be surprised by the benefits you can gain by investing into the volatility of the market, but make sure all decisions are taken in a diversified manner and you research risky stocks and investments before making the decision.

Give to a cause you care for or to a loved one

During the rest of the year, we are strapped in by our financial obligations and cannot donate or contribute to causes we care about or help out our loved ones who maybe in need. However, a bonus offers you a great opportunity to invest in helping others gain education, protecting the environment or any other cause you believe in. How does this multiply your income? Well, any money invested in society comes back to individuals in the form of increased social benefit, not to mention the extra tax benefit of the donation.

The writer is head of Edelweiss Personal Wealth Advisory

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