DIWALI BONUS: Splurge, but also repay costly debt, replenish emergency fund

With Diwali around the corner, companies have started announcing bonuses. Some have been particularly lavish.

- HIMALI PATEL

A Chennai-based firm gave away 28 cars, including Mercedes-Benz models, and 29 bikes. A Haryana-based firm has promised its superstar employees two Grand Vitara SUVs and 13 Tata Punch cars.

Many companies also give generous cash bonuses to their employees. Instead of splurging the entire amount, employees must use this windfall judiciously.

"Don't spend all the money impulsively. Adopt a budgeting mindset," says Nehal Mota, cofounder and chief executive officer (CEO), Finnovate.

The budgeting approach

The bonus money should be divided into various buckets.

"You could allocate 30 per cent to electronics purchase or home upgrade, 10 per cent to a memorable family vacation, and another 30 per cent to reducing high-cost debt. Another 10 per cent could go into self-improvement and 5-10 per cent into charitable donations or gifts," says Mota. Those without highcost debt can invest the money to achieve financial goals. A budgeting approach balances the impulse to spend while addressing important financial priorities.