The most awaited time of the year where your hard work pays off – your 13th and 14th-month bonuses are coming! Before you start hitting the malls and bazaars and go crazy on holiday sales, know that there are smarter ways to handle your hard-earned money.
Don’t Keep It All in Your ATM Account
Having a sizeable amount of money that’s readily accessible is highly tempting. You can’t help but feel like you have an unlimited pot of gold right in your pocket.
To eliminate the risk of overspending, make it harder for you to get to your money. When you receive your bonus, transfer it right away to a bank account that’s not connected to an ATM. Of course, you can’t keep it all in your wallet either! That goes for accounts you can use to electronically transfer funds out of as well.
Putting more obstacles between you and your precious bonus will force you to take time and think about what you’re going to spend it on. If it’s not worth the effort of going to a bank and withdrawing the money, then it’s not worth buying.
Pay Off Outstanding Balances
Another thing to watch out for our credit cards. Those handy plastic rectangles are double-edged swords. On one hand, they’re great for building up your credit score and optimizing your cash flow. On the other hand, they’re also dangerous vehicles for overspending since you can’t “feel” the money physically. This results to bill shocks come statement dates.
If you have outstanding balances on your credit cards, use your bonus to pay them off in one go. Paying only the minimum amount will simply make your debt skyrocket.
Credit card interest rates are automatically added even if you’re only a day late in paying. So if you have a ₱20,000 balance that’s due on the 16th with a 3.5% interest, and you only pay the minimum ₱500, the remaining ₱19,500 is will automatically incur a ₱682.5 finance charge in your next bill. On top of that, some banks charge late fees as well.
This is also applicable to any other debts you have. If you’ve taken out loans, dedicate a portion of your bonus for paying off the next few installments of that loan. This way, if you experience a drought in your cash flow next year, you wouldn’t have to default on your loan payments
Create or Expand Your Emergency Fund
You should already have an emergency fund. But if you don’t, your bonus is the perfect starting point! The general rule is having at least 6 months’ worth of your monthly expenses in that account.
If you’ve already started your rainy-day fund, take this opportunity to expand its coverage to cover 8 months up to a year of expenses. This will provide you longer security should something like a health crisis, disaster, or joblessness occur.
Boost Your Cash Flow
Make your money work for you. That’s the basic principle of investing. Set aside a portion of your year-end bonus for investing in stocks, bonds, UITFs, or mutual funds. Better if you invest in vehicles that give out regular dividends or cash-outs.
These days, there are insurance products with investment options that also give regular cash-outs. Not only do you get protection, your investment grows, and you get extra money to help with your monthly expenses.
Buy Something That Will Appreciate in Value
If you really want to splurge a little, at least splurge on something that will become worth more over time. This includes precious stones and metals, real estate, or art.
Some argue that designer label handbags are sound investments. While limited edition ones could indeed become rare items in the future and hence increase in value, most ordinary designs end up sold in second-hand stores.
Invest in Yourself
Buy a book or an online course. Learn new skills or even a new language! Use your bonus to increase your market value. This could lead to better career opportunities that can boost your earnings later on.
Another way to invest in yourself is through your health. Buy those supplements. Get that gym membership or yoga pass. Have those healthy meal boxes delivered! After all, if you don’t have good health, then you can’t enjoy your bonuses.
Take a Well-Deserved Break
Pamper yourself. Treat yourself and your family. Go on a weekend road trip. You’ve worked hard and you deserve a reward to refresh and motivate you for the next year!
Before going trigger-happy on that “Book Now” button, however, first create a plan and budget for this reward. Who are you treating to a buffet dinner or taking on that mini vacation?
Give Back
Your 13th and 14th-month bonuses come in the holiday season – a time to spread love and cheer! Now that you have money to spare, take this opportunity to share the joy of abundance with the less fortunate. Pay it forward!
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