Emergencies like job loss, sudden medical expenses, or home repairs happen unexpectedly. If you are not prepared for it, it can leave you financially unstable. This is when an emergency fund can help you meet urgent expenses without having to dip into your savings. So, use your Diwali bonus to create an emergency fund. Every individual should have an emergency fund that covers his basic needs for 6-12 months.

Use it to increase SIP contribution.
Investing in mutual funds can prove to be effective in achieving long-term financial goals. Increasing SIP investment regularly is an effective strategy to reach your financial goals faster. So, if you do not have any outstanding bills or debts, it will be financially wise to use the Diwali bonus to increase your SIP contribution.

Upgrade your health insurance policy.
With the rise in medical inflation, the cost of healthcare is increasing rapidly every year. This is why having adequate health insurance coverage has now become a necessity.

If you have not taken health insurance till now, then use your Diwali bonus to buy a comprehensive health insurance plan for yourself and your family.

You can also use the bonus to increase the coverage by adding riders like critical illness or maternity benefits based on the needs.

Bonus can be useful in repaying debt.
If you want to reduce your debt, then repaying even five percent of your total loan is also an effective strategy for achieving financial goals. The Diwali bonus you got can be useful in this. Alternatively, you can also use the bonus to increase your monthly installment (EMI) payment or pay additional EMIs to reduce the tenure of your loan.

If the interest rate of your loan is very high, then evaluate your finances and consider repaying the entire loan.

You can use the Diwali bonus for long-term investment. Equity is preferred for outpacing inflation in the long term. Therefore, equity mutual funds are a strong option to meet long-term goals.