Should I spend my performance bonus, invest it, or pay off debt?

A performance bonus is always a welcome windfall. It's a token of appreciation that your company rewards you with in lieu of your hard work and the key results achieved by you to help company's growth. No sooner does one get a lumpsum these questions make her/him restless: How should I make this extra capital work for me? Shall I put it into an investment to achieve a savings goal or shall I buy something expensive, yet valuable? While buying something valuable can be an excellent decision, so long as you don’t spend more than 10-15% of your bonus amount, questions like what should one do with the rest always remain.

These are five ways you can effectively use your performance or appraisal bonus this year.

  • Pay off high-interest debt 

    Double-digit interest on a loan or mortgage can be harsh, especially if you have been trying to clear it for a long time. You should use your bonus at this time to repay any high-interest debts before shopping for frills. Financial experts say that an individual’s priority must be to do away with the debt that commands an interest rate more significant than what you could earn on that money elsewhere. Paying off debt can ensure peace of mind and help you clear your finances for other expenses.
  • Create an emergency fund 

    It’s a good idea to have an emergency fund that can meet 3-6 months of living expenses. This can ensure a stress-free lifestyle if you were to face an unexpected and costly medical issue, or unable to work for any reason. An emergency fund offers much-needed liquidity in the event of an unanticipated expense. With an emergency fund at hand, you may not have to apply for a high-interest loanto handle a crisis..
  • Invest for the long haul

    Younger folk find it hard to contemplate the prospect of retirement. But it pays to start saving when you’re young. The best part about starting early is that your money has ample time to grow. Setting aside a part of the bonus for investment can help you reap significant benefits in the years to come.

    Keep reading to know more about retirement planning.
  • Spend on something of value

    A bonus, after all, is a nice little gift that you receive as a well-earned reward for your work. You may want to use it to purchase something of value. As long as you are not dealing with high-interest debt, spending on a valuable that costs 10-15% of your bonus is a good idea.
  • Splurge a little

    Once you have taken care of your outstanding debts and investment plans, you can utilise the remaining funds for yourself. You have worked hard through the year, and you deserve to spoil yourself a little. Take advantage of festival discounts.


Spending and investing is fun but using the amount to repay debts, when you get a bonus, is double the fun. But if you need more money after spending your appraisal or performance bonus, HDFC Bank Personal Loan will take care of it.

HDFC Bank Personal Loan come at a low interest rate with pocket-friendly EMIs starting at Rs 2187 per lakh and flexible tenures that range between 12 months to 60 months for the salaried and 12 months to 48 months for the self-employed. What’s more, pre-approved customers can get a Personal Loan up to Rs 40 lakh, within 10 seconds and others can get it in less than four hours!

Looking to apply for an HDFC Bank Personal Loan, click here to get started.

* Terms & conditions apply. Personal Loan disbursal at sole discretion of HDFC Bank Ltd. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.