It’s “-ber” month already and I can now smell Christmas right around the corner.
It’s exactly 36 Days to go before Christmas!!
What is good about the last quarter of the year? You may answer: vacation, gifts, parties, reunions and of course, the most awaited extra money in the form of: “Year-End Bonus or 13th month pay or Christmas Bonus” whatever you want to call it. It is one of the most awaited happening of the year.
Perhaps, by now, you are already planning what to do with that extra money you are going to have.
But before you buy that iPhone 6, or a new TV or actually decides on what to do. Read the 6 smart ways on how to spend your bonus money.
1. Pay Off Your High-Interest Debt
Many Filipinos have a lot of high-interest debts, especially Credit Cards. A great use of your year-end bonus is to pay-off as much debt as you can. It is costing you thousands of pesos a year, so, why not get rid of it?
If you look closely at credit cards, and if you don’t don’t know how to use it wisely, it charges 3.0 – 3.5% per month to unpaid debts, meaning that is 42% a year. For example, you have accumulated unpaid debts on your credit card with 100,000 pesos and you just keep on paying the Minimum Amount Due, it means, credit card companies earns from you 42,000 per year. Think about it!
2. Beef Up you Emergency Buffer Fund
Emergency Buffer Fund in a “must” for everyone, no matter how old you are, where ever you work or how big your monthly salary is.
I always recommend to have an emergency fund of at least 3 times your monthly expenses if you are employed, or at least 6 times your monthly expenses if you are self-employed and 12 time your monthly expenses if you are a seafarer.
If your emergency fund is nowhere near the computed amount, then use your bonus to top it off. If you don’t have an emergency fund at all, your bonus money is a good place to start.
3. Save for Big Future Expenses
Most people procrastinate and don’t save ahead for big expenses like “vacations, parties, home remodel or new cars. But if you don’t save ahead, you will probably run into debt, which is not a good thing.
To help you live a debt-free-lifestyle, you need to save for all the big expenses in the future. By planning and saving ahead, you will protect yourself from getting into more debts. Any bonus money can help add to your savings you already have or it can help you get started.
4. Get yourself protected. Increase your life insurance
Only 14% of the Population in the Philippines have some sort of Life Insurance. And of those 14% that has life insurance almost all of them are under-insured. Your bonus can help you increase your life insurance coverage or if you still do not have one, it can help you purchase a life insurance policy.
Be a responsible person, love your family, and insure yourself. Remember, eventually everyone dies, so, why die for free?
Here is how you compute on how much life insurance you actually need.
5. Invest for your Retirement
According to SSS survey, 98% of Retiring Filipinos cannot support themselves when they are too old to work.
They either depend on their own children, depend on charities, or they still need to delay retirement altogether and continue to work even if they are very old.
Only 2% of the population actually are financially independent and can support themselves throughout the retirement years.
If you are going to depend only on what you are going to get in your SSS, then, you might want to read this: “SSS Retirement Benefits, Is it Really Enough?”
Your bonus can help you start your very own retirement plan by investing your bonus in an investment vehicle that gives high compounding interest rates.
6. Start a Side Business
I am a huge fan of having a multiple income streams because I don’t like to be dependent on one job as the only source of cash.
One of the best ways to earn extra is to start a side business. Of course, this is not for everybody. It does not have to be big and complicated. For example, you can start your very own online business and start selling things you love to sell.
Your bonus money can take you off the ground on whatever business venture you are considering right now. You can start small and work your way up to something that might make you quit your 8-5 job.
Above are only smart suggestions you might want to consider before actually holding that much awaited bonus money. It is still up to you if you want to do the smart thing or live like a “one-time-millionaire.” But just remember, “regret is always at the end.”
Happy Ber Months! How would you like to spend your year-end-bonus? Comment below, we would like to hear from you.
For inquiries on how to invest and save wisely, please contact me here.
Read more:
- Credit Card: The Bad, the Ugly and the Good
- 10 Tips to Avoid Online Banking Scam
- Hurdles of Financial Freedom (Mga Balakid sa Iyong Pag-Yaman!)
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