Extra money by this time of the year will send a surge of euphoria in many people. Bonus will always comes in handy especially those who have been through hard time and learnt about the value of money. But before we start squandering our bonus money, here’s a few things to consider from financial planning perspective.
Settle high interest debts
No brainer on this due to its exorbitant 13 to 18 percent interest rate on outstanding balance. On the contrary, it is NOT easy to get similar rate of return on investments nowadays.
Once credit card debts are paid off, next in the list are personal and housing loans so that principal and daily interest charged are lowered.
Money in reserve
General rule of thumb is to have cash to cover 6 months of living expenses. If it’s RM 5000, then that means having RM 30,000 liquid cash in fixed deposits.
If there’s emergency, you don’t need to sell off your possessions or borrow money from Ah Long.
Do this first before investing.
I know many of you are tempted to put this as #1 priority. You know what, I am no saint, and I think the same, if I follow my emotion that is.
Big or small, it doesn’t matter. It could be a retreat in your local beach resort or a fine meal. We should all pamper ourselves once in a while.
*Reminder to self: Don’t be tempted by Air Asia zero fare offer in my inbox*
Give to charity
If you think times are hard, think about charitable organizations. Donations are scarce in times like this, so it will be much needed.
Personally, I didn’t really make any donations in the previous years. But I will, before the year ends. It could entitle for tax relief too. I’ll do that and share with you in subsequent posts.
Maintenance & Repairs
That trusty car of yours probably need some touch, overhaul or a minor servicing. Or house pipes leaking? The best time is none other than now.
Some might always complain there’s no money left at the end of the month to invest. How about now? You can start small, but start now. But keep in mind point#2, treat ourselves moderately 🙂
The key is striking a balance between enjoying some short-term benefits and securing greater long term financial strength through judicious saving & investing. Treat your bonuses this year with extra care and respect, as it will allow for significant long term financial improvement.
I got to admit that the bonuses will be used to recuperate savings cum investment pool after all the wedding expenses 🙂
How about you?