Your 13th month pay may be a government-mandated bonus, but it’s still a bonus nonetheless. It’s your reward for the past year’s hard work, so to blow it all off on impulsive buys like there’s no tomorrow is the dumbest thing you could do.
Manulife Financial Advisor Jenny Rodriguez stresses that while you should definitely enjoy the fruits of your labor, you should be looking for ways to make the most of that enjoyment, too. Figuring out that last bit is the tricky part, but worry not—we’ve got you covered.
Regardless of how young you are, once you’re of the age to earn your own money, then you’re old enough to start your own smart insurance and investment plan. So first thing’s first, you’ve got to divvy up that bonus in your head even before you get your hands on it.
How much should you allot for your savings and how much should you allow yourself to splurge, you ask? According to Rodriguez, allocating 20 to 30 percent of your 13th month pay for your savings should be enough. But if you’re willing and you’re able, then by all means, set aside a bigger amount.
“Ang inflation rate dito sa Pilipinas is consistently at around 8 percent," she says. "So imagine mo yung increase ng suweldo mo every year—at par ba siya dun sa growth ng cost of living? Eh for the most part, 13th month pay goes on top of your monthly income naman, so kung kaya mong mag-allocate ng big part of it into additional savings, that would be really helpful for you,” continues Rodriguez.
She recommends putting half of your allocation for savings in the bank, and using the other half to take out an insurance with investment policy.
“I still advise na maglagay ka rin sa bangko, kasi andiyan yung immediate emergency needs. Like if hindi umabot yung suweldo mo sa next cut-off, kailangan may paghuhugutan ka agad. Yung investment kasi is supposed to be viewed as long-term. You can't just withdraw it anytime you want. May charges siya.”
Rodriguez also points out the importance of getting a hybrid investment-insurance plan saying, “Kung kukuha ka ng investment only, kapag may mangyari sa'yo, iho-hold yun eh. Mafe-freeze yung assets mo at matatagalan bago may makuha ‘yung loved ones mo. If insurance only, depending on your policy, baka wala ka namang makuha hangga’t walang nangyayaring aberya, so go for the hybrid.”
Once you’ve done all the math to cover your ass in case of future crises, you can get to the portion of your bonus that you can spend here and now. Let’s say you’re left with 70 percent of your hard-earned cash to squander, Rodriguez warns, “You should always prioritize your needs bago ka mag-spend sa wants, kasi kung uunahin mo yung wants, magkukulang ka talaga dun sa needs.”
Examples of these needs that she mentions you should settle first are debt or loan payments. Others are household appliances or personal belongings that are due for replacement. If, say, your phone is just about ready to give up on you, then it’s okay to go ahead and buy yourself a new one.
Otherwise, she suggests investing in accessories or peripherals that can prolong the life of your current unit, like a more efficient charger or high-quality casing. You can also splurge a little by getting wireless earbuds or a bluetooth fitness tracker, which lets you enjoy certain upgrades without the makabutas-bulsa cost of getting an iPhone X for instance.
After considering these expenses, then you can feel free to use what’s left of your bonus for things like Christmas gift shopping or #wanderlust adventures, but remember not to overdo it with the YOLO-ing still.
A car may also seem like a pretty good thing to spend your 13th month pay on, but Rodriguez advises against it. “Ang value kasi ng kotse nagde-depreciate lang naman siya over time, unlike real estate. Also, marami nang available na low-interest car loans ngayon na pwedeng monthly mo huhulugan, so bakit mo kailangang gastusin dun yung bonus mo?” And with the horrible traffic that plagues the city daily, would you really choose to put up with all that hassle when you’ve got viable options with Grab and Uber?
There’s a chance that you don’t get to use up that 70 percent you’ve allocated for personal spending, and if that’s the case, then all the better. Rodriguez recommends using those extra funds to either top up your existing insurance and investment policy or open up a new one for your wife or kid.
“Top up is yung maghuhulog ka ng one time na extra sa investment,” she explains. “Kung hindi mo pa afford to take out another policy, it's a good way to save and grow your money pa rin.”
An investment-insurance policy started early can be a big help to your loved ones in the future. Rodriguez shares the story of a friend whose father opened up a policy for him when he was only 16 years old.
“By the time it was passed on to him when he got his first job, the investment account had already matured to around P500,000. And now with a baby on the way, sobrang laki ng naitulong nung pera sa kanila ng wife niya sa pag-prepare sa unexpected expenses of raising a child. Napakaswerte nila. It was a nice gift from his parents. Parang maagang pamana ang kinalabasan nung investment policy.”