{"id":1756,"date":"2017-04-29T15:46:42","date_gmt":"2017-04-29T10:16:42","guid":{"rendered":"http:\/\/easybankingtips.com\/?p=1756"},"modified":"2017-04-29T15:46:42","modified_gmt":"2017-04-29T10:16:42","slug":"use-bonus-money-smartly","status":"publish","type":"post","link":"https:\/\/easybankingtips.com\/use-bonus-money-smartly\/","title":{"rendered":"How to Use Your Bonus Money Smartly"},"content":{"rendered":"
Bonus money is a windfall and you should know how to strike the perfect balance between living the moment and allocating it towards your financial goals.<\/p>\n
Although we all pay for insurance (life and medical) to deal with a potential financial crisis, financial experts still recommend building an emergency fund that takes care of our daily expenses for about 6-8 months, should we go jobless and remain unemployable for that period.<\/p>\n
Although most of are pretty optimistic about our future, we can\u2019t still deny contingencies such as damage to property and accidents.<\/p>\n
You should build your emergency fund based on your spending patterns (monthly running expenses) in the past six months. Review the fund every quarterly and see if it is enough to meet your running expenses for six months during emergencies.<\/p>\n
When you get bonus salary, revisit your emergency fund and use a part of your bonus money to refill it. There are a number of instruments in which you invest: recurring or fixed deposits, liquid mutual funds, and debt funds are some of them.<\/p>\n
Even though you have invested in insurance policies, you still need to reassess your insurance needs from time to time. Insurance needs change based on a number of factors such as your family\u2019s spending habits, income fluctuations, and rising inflation. The reevaluation process helps you put things in perspective and helps you insure your family adequately.<\/p>\n
When you get your bonus money, reconsider your insurance needs and see if you need to invest in a fresh insurance cover or supplement the policies you already have.<\/p>\n
Currently, the interest rates are one of the lowest and the banks are also offering loans at lower interest rates. Naturally, the potential returns on fixed income instruments have also gone down. Therefore, it\u2019s wise to use your bonus salary towards prepaying any principal loan balance you may have.<\/p>\n
Prepaying your principal loan amount will significantly lower your interest payments in the long run. In doing this, you will also secure yourself against any potential rise in interest rates in future.<\/p>\n