5 Ways to Spend Your Bonus Check Without Regrets

Nothing boosts employees’ morale like the promise of a handsome bonus. Year after year, people slog through months of hard work to achieve goals and juggle deadlines. All this in the hopes of securing the perfect appraisal scores for a well-deserved bonus. But, now what? Once the shine and excitement wear off, what do you do next?  

1. Treat yourself to big-ticket items from your online wishlist.
2. Make a strategic plan that ensures some savings 

If you prefer option A, things may not turn out well in the long run. However, those who opted for option B can reap the benefits of their wise decision for months to come.  

Harnessing your desire to splurge is key to making your wealth last for years. Without a firm hold on these urges, you might succumb to temptations like season’s end sales or discount blowouts. Instead, start planning early to ensure this bonus can act as an emergency corpus or pay off outstanding dues.  

Curb Your Urge to Splurge: What not to do 

Despite the pay cuts and lay-offs during the pandemic, many employers have rolled out hefty bonuses. It comes as a relief for those who previously struggled with their finances. However, a surplus of wealth may invite the temptation to give in to impulsive purchases.  

While holding off on desires for instant gratification, here are five things to avoid doing with your bonus.  

• Confuse it with a windfall and use it without appreciating the hard work put into earning it  
• Investing the amount into various schemes without closing outstanding debts, like credit card dues  
• Funding everyday expenses with it instead of saving it for payments 
• Setting it aside in a low-interest savings account and not exploring the benefits of schemes with higher returns  
• Gamble away the money in hopes of multiplying it tenfold 

Always treat your bonus like an earned income, not an unexpected windfall! It’s better to split the money to complete various expenses while setting aside a small portion to treat yourself. You must follow healthy money management habits to avoid frivolous purchases.  

The Best Ways to Use Your Bonus 

To make your money last, learn the best ways to utilise a bonus check. Your proactive measures could bail you out of difficult financial periods, like the recent COVID-19 pandemic. The following guidelines can help you deal with a bonus without losing it to poorly informed decisions.  

1. Pay Outstanding Debts  

It’s not a good idea to splurge or invest your bonus without repaying debts. Use the bonus to close high-interest debts before moving on to investment plans. Whether outstanding credit card bills or an ongoing personal loan – pay off all your debts! However, check the pre-payment charges beforehand to avoid additional fees.  

Lastly, pay off debts that offer tax benefits like student loans or home loans. 

2. National Pension Scheme (NPS)  

Catch an additional tax break by investing in NPS! While filling out your investment declaration form, opt for this scheme. Under Section 80CCD (1b) of the IT Act, 1961, you can invest up to ₹50,000 and be eligible for tax deductions. It is over the limit of investing ₹1.5 Lakhs under Section 80C.  

3. Sukanya Samriddhi Yojana (SSY)  

It is a suitable investment option for individuals with daughters under age 10. It offers the benefits of compounded interest for a lock-in period of 21 years. Being one of the highest interest rate paying investment avenues, it’s great for putting aside savings for your daughter’s future.  

Under Section 80C, you can claim tax benefits on investments made under this scheme. However, the maximum investment in one financial year is ₹1.5 Lakhs.  

4. Real Estate Investment  

With home loan interest rates decreasing, it’s the ideal buyers’ market in the real estate sector. Furthermore, first-time homeowners receive an additional tax break of ₹50,000 on home loans. Overall, if the loan amount is less than ₹35 Lakhs and the property’s value is under ₹50 Lakhs, you become eligible for deductions up to ₹2.5 Lakhs. This deduction applies to the interest payment.  

5. Create an Emergency Corpus  

Unless you already have readily liquid funds, it’s time to create an emergency corpus. This amount can fund unpredictable expenses like sudden hospitalisation, home or car repairs, etc. It will prevent the compelling need to apply for personal loans and save you thousands in interest rates.  

Now, it’s not wrong to spoil yourself a little. You worked hard for this money, but the long-term benefits of saving this amount or using it for other expenses are far more rewarding. To explore a variety of traditional and modern investment instruments, visit Bajaj MARKETS today!