New Delhi, Nov. 7 -- Diwali often brings a welcome addition to the monthly salary in the form of a festive bonus, performance-linked payout or annual variable pay. With shopping offers, travel plans and family celebrations competing for attention, however, the additional money can disappear faster than expected.

While there is nothing wrong with using part of the bonus to celebrate the festival, treating the entire payout as disposable income could mean missing an opportunity to improve your financial position.

A Diwali bonus can help salaried individuals address gaps in their financial planning, prepare for large expenses and accelerate progress towards long-term goals. The key is to give the money a purpose before deciding how much to...