This holiday bonus is often the reason why spending increases in the last months of every year. But are you using it wisely?
Here are some tips and suggestions on how you could use your 13th month pay effectively.
Share your blessings
In the spirit of thanksgiving, learn how to share blessings you reaped this year. Practice giving and be generous. As they say, it is better to give than to receive.
You bring positive energy to the universe when you share. And, I believe, it gives back positive karmic energy. I also think that we should only give what we can afford. That’s why we have to be responsible when giving.
One should be financially stable to be able to extend financial help. Never feel obliged to extend financial help when you are not yet financially stable. Help yourself first.
Here are 3 quick indicators to determine whether you are financially stable:
Alternatively, you can share your time and energy if you are not yet financially stable and use your 13th month pay to boost your financial standing. Here are my guidelines on how to help others financially.
If you have outstanding loans or unpaid debts, use your 13th month pay to settle these. Nothing beats the feeling of becoming free from the shackles of debt.
Loans should be used for productive purposes only – activities that earn money. You should prioritize paying your debts with your 13th month pay all the more if used loans for simple consumption or to finance your "wants."
Protect your loved ones
Use your Christmas bonus or 13th month pay to buy insurance. Show your loved ones how much you love them by giving them protection in case something happens to you.
If you have dependents, it is a must that you get medical and health insurance. If you can't afford both, health insurance will do and you’re better off using the budget for life insurance to directly invest.
Avoid the temptation to buy investment-linked insurance – also called variable universal life insurance. It is better to follow the "Buy Term, Invest the Difference" strategy to make the most out of your hard-earned money.
Prepare for your future
You can also use your 13th month pay to prepare for your future. Use this to beef up your emergency savings or emergency fund if you haven’t yet. You will never go wrong with saving for rainy days.
Understandably, it is very tempting to spend your 13th month pay, especially during the holiday season. You need not spend all of it immediately. My favorite definition of savings is this: Savings is the postponement of the pleasure of spending.
Following that definition, you are already saving when you postpone spending on that rush seat sale (save for your future dream vacation instead!). Think of something that excites you and make this your inspiration and motivation to save.
Try social investments
As a social entrepreneur, I promote social investments. These are investments that provide modest returns but also have a social and/or environmental agenda. Not only do you enjoy good returns but you also contribute to improving the quality of life of the poor and to protecting the environment.
You can also invest in social enterprises and microfinance institutions. You can check my list of social investments here.
Relax and recharge
Lastly, you can opt to use the money to relax and recharge. This is your way of rewarding yourself for working hard this year.
I hope though that you won’t spend all your 13th month pay for this purpose alone. Aside from spending, you can enjoy family time and simple joys.
At the end of the day, the best way to maximize your 13th month pay is to use it to reward yourself a bit and allot a significant part of it in improving your financial situation. – Rappler.com
Vince Rapisura is a faculty member of the Ateneo de Manila University and is also the founder of SEDPI Group of Social Enterprises.