Looking forward to your annual 13th-month pay or bonus? Wondering how to spend it this year? Whether it’s a new gadget, a home appliance, a luxury bag, or an exciting trip to Japan or South Korea, the possibilities are endless.
Of course, there’s nothing wrong with spending your hard-earned money. According to a JobStreet survey, Filipinos save and spend some of their bonus. But if you want to be moneysmart this year, you might want to check our list of how to spend your 13th month’s pay.
If there’s one gift that would be most valuable to you, it is to be financially secure and stable amidst inflation. Here are some ideas on how you can spend it.
- Start investing in the stock and shares
- Pay your credit card debt (and other personal debts)
- Start an online business or side hustle
- Invest in upskilling for career advancement
- Top up your emergency funds
- Open a high-earning savings account
- Invest in cryptocurrencies
- Add more funds to your MP2 savings account
- Reward yourself (and the family)
- Buy insurance
- Start saving for early retirement with PERA
- Spend on annual medical check-ups and supply of vitamins and medicines
1. Start investing in the stock and shares
Opening an account on an investment brokerage is super easy these days. You can sign up and get verified online. For example, at COL Financial, you can register for a free trial or sign up immediately and get verified if you provide the necessary IDs and documents.
You can also do it on First Metro, another investment brokerage that lets you buy and sell stocks and shares independently. With your bonus, you can already start buying blue-chip stocks and let them grow for the long term.
2. Pay your credit card debt (and other personal debts)
Avoid paying compounding monthly interest by using your bonus to clear credit card debt. Aim to pay off everything and enjoy a stress-free holiday this year. One of the best ways to pay yourself is to be free from bad debts.
Not only that, but you also gain good credit standing from your credit card issuer. If you still have personal debts you need to settle, don’t hesitate to contact your lender right away, even if it’s a relative or a friend. Paying your bills, loans, and other informal debts by the end of this year will make your holidays and New Year worry-free.
3. Start an online business or side hustle
You can use your 13th-month pay to start a side business and earn extra cash in your spare time. Many Filipinos make money through side hustles like selling items on Shopee or Lazada. If you have a knack for words, explore blogging and share your knowledge about a specific topic, from homemaking to entrepreneurship.
If you have extra space at home, you can use your bonus as capital to build a mini sari-sari store. The starting capital is around ₱30,000 to get a decent stock of essential items like cigarettes, soft drinks, and canned goods. There are also low-cost franchises and dealership packages available to explore.
For example, for as low as ₱10,000, you can have your own Kettle Korn business. You can do all these from the comfort of your own home or sell them to family, friends, and co-workers.
4. Invest in upskilling for career advancement
Make the most of your 13th-month pay by investing in learning courses. Expand your skillset to enhance your career. Many options are available to help you grow. Explore various online and offline courses that align with your needs and budget.
For instance, check out Udemy, a website offering various topics and skills such as photography, web development, and graphic design.
With prices starting from $10 or ₱550 — almost three cups of Starbucks coffee and a sandwich — you can select multiple courses of interest and earn certifications.
5. Top up your emergency funds
Let’s not forget to save up for emergencies, too. Remember those times when you woke up one day to find out that your car had been stolen or someone close to you, whether a family member or spouse, suddenly got hospitalized?
Ensure financial stability by having three to six months’ worth of emergency savings. Take advantage of current favorable interest rates from banks like Seabank, GoTyme Bank, and CIMB, where your savings earn up to a 5% interest rate per annum.
6. Open a high-earning savings account
If you don’t have a savings account yet, this is the best time to open one for yourself. Choose a bank that offers high interest rates to enjoy the compounding effect after a year or more.
Digital banks like GoTyme Bank offer a 5% interest rate per annum, whereas CIMB gives you a 2.6% interest rate. You also don’t have to visit the bank to open an account. You can do that right from your smartphone and get verified if you submit the valid identification cards and documents the bank requires.
7. Invest in cryptocurrencies
If the examples above don’t convince you yet, buying cryptocurrencies is another way to spend your 13th-month pay. Although the market is highly volatile, which could either give you a double-digit percent gain or loss, you can always stick to the top 10 high-performing cryptocurrencies like Bitcoin, Ethereum, and Cardano, to name a few.
The only downside when investing in cryptocurrencies is that you should research what coins and tokens are worth buying and hold them for long term or sell them once the bull market is done.
8. Add more funds to your MP2 savings account
If you have an MP2 savings account at PAG-IBIG, you can also increase your savings with your 13th-month bonus. Usually, the minimum contribution you can deposit is ₱500, which can be paid monthly.
But did you know you can also add more money to your account within a year? Imagine if you put your money into MP2 every year, then you’d indeed have a higher return on investment after the 5-year maturity period, on top of the dividends you receive annually.
9. Reward yourself (and the family)
If you have been planning to buy this home appliance or gadget for yourself or the entire family, this could be the perfect time to buy since most shops are already offering promos and huge discounts for their year-end sale.
The 12.12 shopping festival is coming up and if you’re keen on buying a new home appliance or a gadget, always be on the lookout for the promotional codes to get up to 50% off. If you don’t want to spend on these things, you can book an out-of-town trip during the Christmas holiday or a staycation for some quality time with your family.
10. Buy insurance
If you don’t have insurance yet, this is the sign you have been waiting for – spend your 13th month’s pay on life insurance.
You can ask around your friends who are financial advisors at Sunlife, AXA, PruLife UK, and BPI AIA, to name a few, and inquire about a quotation of basic or traditional life insurance to start the ball rolling.
Why not use your bonus to pay the annual premium instead of monthly or quarterly, saving you more than hundreds of pesos monthly? You get a lower premium price if you pay it annually, especially if you’re still young.
The premium is much lower in your 20s, roughly around ₱20,000, compared to if you get one in your 30s, which would be around ₱30,000 with primary riders or coverage.
11. Start saving for your early retirement with PERA
Start saving for your retirement with PERA As for investing in retirement with PERA (Personal Equity and Retirement Account) in the Philippines, it offers several benefits, such as a tax credit of 5% if you max out your allowable annual contribution of ₱200,000.
That means the 5% tax credit is deductible from your annual income tax. Starting young allows you to use compounding interest over time, resulting in a larger retirement fund. PERA investment managers grow their money through stocks, UITFs, exchange-traded bonds, and government securities.
Investing in early retirement gives you more time to grow your savings and ensures financial stability during your golden years. With PERA, you can build a secure future and enjoy tax advantages.
12. Annual medical check-ups and supply of vitamins and medicines for the family
Yearly medical check-ups are proactive preventive measures that help catch health issues early on. Early detection through regular consultations and screenings maximizes the chances of successful treatment.
This approach can save your family from hefty treatments and hospitalizations. Spending on vitamins and medicines may feel like an immediate expense, but it’s a smart move for long-term savings. Detecting and treating illnesses early on is less costly than tackling advanced conditions.
Health is your greatest wealth, so don’t neglect this opportunity when you have the means.
When spending your 13th-month bonus wisely, prioritize your goals for the year-end. Focus on areas that require attention and make informed choices.
For some people, this might mean investing in stocks and shares or starting an online business. Others may want to think about upskilling for career advancement or topping up their emergency funds.
The key is not just knowing what to do – we don’t all have the same priorities – but also taking action and planning.
We hope our list has given you plenty of ideas and practical steps toward getting started with smart personal finances. Let us know which of these examples you should do first.