Expats often pick up significant cash bonuses for bringing projects in successfully, but should they spend or save the money?
Employers around the world pay bonuses for lots of different reasons, but the most common are on the termination of an expat contract and to mark festive occasions – such as Diwali.
Diwali, the Hindu festival of lights in full swing around the world.
Smoke from fireworks is choking traffic and passers-by in Delhi, India, while celebrations are taking place in cities with large Indian populations worldwide.
Marketers also see Diwali as an opportunity by launching discount deals to tempt expats to part with their hard-earned cash.
Don’t blow the cash
Rather than blow the cash on some consumerism that will soon be worthless, think about investing the bonus in you or your financial future.
A good place to start is at home. If you have debt, pay off the borrowings with the most expensive interest first.
The hierarchy is generally credit cards, personal loans, car loans then mortgages. The debts are listed in declining order from cards which have the highest rate, to home loans, which are the lowest.
Interest on credit cards varies between borrowers, but can still hit nearly 40% a year even in these times of low rates.
Paying off debt can seem a waste and a poor way to spend a bonus, especially if the monthly repayments are easily manageable.
Enjoy yourself
However, over a typical five-year card or loan term, reducing the debt saves a significant amount of interest repayments.
Have the discipline to save the monthly repayments to replace the bonus rather than fritter the money away.
Next, look at an emergency fund. Have a cash stash that will pay housing costs, food and the rest of the bills for three months.
Lastly, take some of the cash and enjoy yourself. After all, you have worked hard for that bonus and you need a break or a little luxury to recharge your batteries for the next year.
If you have covered all those bases and are still wondering what to do with the bonus money, think about life or private medical cover to look after yourself and your family.
Next on the list would be investing the cash in a low-risk tracker fund.
