The Diwali bonus is the easiest money of the year to waste, because it arrives with a reason to spend it attached.
The one rule that works: decide the split before the money lands. Once it is in the account, every shop has a plan for it. Before that, you do.
The split I use for any lump sum, bonus or not:
A third to the cushion. Emergency fund if it is below six months. If the fund is full, the most expensive loan, usually the credit card or a personal loan. Paying off 18% debt is an 18% return, guaranteed, tax free. No fund offers that.
A third to the long bucket. Index fund, PPF top up, a one time Bitcoin buy sized like a month of SIP, not like a lottery ticket. Money that you will not see again until it has doubled.
A third to Diwali. Gifts, the trip, the one thing you wanted all year. Spent without guilt, because the other two thirds already did their job.
The mistake I made for years: spending the whole bonus and telling myself the SIP covers the investing. The SIP covers the salary. The bonus was the only money that could have moved the needle, and it went into a phone I replaced eighteen months later.
Bonus coming this week? Write the three numbers now, before it arrives.
What is your bonus split this year? Thirds, or something else?
Education only, not financial advice.
$BTC #Diwali #PersonalFinance #MoneyHabits
The one rule that works: decide the split before the money lands. Once it is in the account, every shop has a plan for it. Before that, you do.
The split I use for any lump sum, bonus or not:
A third to the cushion. Emergency fund if it is below six months. If the fund is full, the most expensive loan, usually the credit card or a personal loan. Paying off 18% debt is an 18% return, guaranteed, tax free. No fund offers that.
A third to the long bucket. Index fund, PPF top up, a one time Bitcoin buy sized like a month of SIP, not like a lottery ticket. Money that you will not see again until it has doubled.
A third to Diwali. Gifts, the trip, the one thing you wanted all year. Spent without guilt, because the other two thirds already did their job.
The mistake I made for years: spending the whole bonus and telling myself the SIP covers the investing. The SIP covers the salary. The bonus was the only money that could have moved the needle, and it went into a phone I replaced eighteen months later.
Bonus coming this week? Write the three numbers now, before it arrives.
What is your bonus split this year? Thirds, or something else?
Education only, not financial advice.
$BTC #Diwali #PersonalFinance #MoneyHabits