Learn about ways to wisely spend your Christmas bonus by balancing your debts, savings, and investments to achieve your financial goal.
A complete family, food on the table, a happy heart, and a peaceful mind. In this season, we cherish all these things that we are grateful for.
Blessings come our way in different forms, and reaching the end of this pandemic year with a stable job is one. Businesses struggle to stay afloat, and some barely make ends meet. Meanwhile, we are highly favored to still be able to sustain our families’ needs through our paychecks.
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We look back on our hard work and thank the employers who helped us with our professional growth and our co-workers who reduced our tasks. Apart from a healthy working environment, blessings also come our way through monetary incentives.
Many Filipinos are favored enough to receive year-end bonuses and cash gifts. Eligible government workers are entitled to receive a month’s salary as a bonus this December, as approved by the Department of Budget and Management (DBM). On top of this, they also get an additional cash gift of Php5,000.
Private sector employees can also enjoy an extra amount according to the mandatory 13th-month pay guidelines from the Department of Labor and Employment (DOLE) for private companies.
It is the season of giving, after all. But have you made up your mind yet on what to give yourself this Christmas? Is it something that can bring you immediate fun or lifetime security?
Here are some ways you can smartly spend and invest your holiday bonus.
1. Pay off debt
Planning when and where to spend your holiday bonus even before it hits your bank account is the first step away from regretting bad financial decisions later. Clearing off your debts must become your priority before you get distracted by the holiday sales and unnecessary expenses during this happy season.
Your extra pay can cover your high-interest loans, like your credit card debt or your bills. These debts can cost you charges, and paying them off can prevent the fees from increasing. It is also important to remember the people who have helped you financially this year. Paying them the money you owe could be the best way to show your gratitude. Doing this can give you peace of mind as you enter the New Year debt-free.
2. Create your emergency savings
While you can afford a beach vacation or a lavish outfit for Christmas Eve, you should also consider the more practical things your money can buy. Your future self will thank you for saving your bonus this year instead of splurging on momentary fun.
The health crisis has stressed the need for us to prepare for emergency situations. Many unexpected circumstances can arise in these unstable times, like job loss, health issues requiring hospitalization, and family emergencies that can drain your monthly income. You do not have to borrow money if you have an emergency fund ready.
Most financial experts say your emergency savings should be enough to sustain your household expenses for three to six months. This time should be enough to find a new employer, for instance, if you suffer from unexpected job loss.
You can spare an amount from your bonus to open high-interest bank savings account for your emergency fund. Finance company Nerdwallet said having a separate bank account from the one you use regularly keeps you away from spending temptations. It also assures easy access once you have an urgent need for cash.
Investing in insurance is another way to build your emergency savings. You can buy policies from insurance companies that can pay enormous amounts for you if unexpected circumstances happen to you or to your family.
3. Invest for your financial goals
Do not let your bonus go down the drain again this year. That extra cash can be your starting point towards your financial target. You can invest as little or as much as you like to boost your financial situation. By doing this, you can see your money work for you, and it is like you have created another stream of income!
Here are ten of the most common types of investments listed by SmartAsset:
- Mutual Funds
- Exchange-Traded Funds
- Certificates of Deposit
- Retirement Plans
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Each of these investment types has its own risk and reward levels, SmartAsset said. But for those who want to gain investment experience first, the stock market is the most common way to start.
4. Invest in real estate
Avi Waxman photo on Unsplash
You can make your great pay this holiday as an opportunity to own a home for you and your family to live in. Indeed, you can browse through Camella’s house and lot for sale and start investing in your dream home. But real estate offers more than that. It can also be a sound investment if you want to have a steady income and increased wealth.
Property investors have several options, including rent, value appreciation, profit from sale after a property revamp, and real estate investment trusts or REITs. Being the newest addition to the real estate investment type in the country, REIT has already gained popularity among local investors. This type of investment, like real estate mutual funds, comes with higher volatility and lower diversification benefits. It, however, offers better liquidity and market pricing.
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Committing to an investment plan is a painstaking process. It is your time and your hard-earned money at stake. If done right, the residential house, lot units, condominium units, and office spaces you invest into can give you tenfold the original amount, you paid after several years.
It is, therefore, essential to make sure that you start your investment journey right and start with Camella. With more than 40 years of its proven performance of giving premium residential developments to Filipino homeowners, Camella has the best offers for local buyers and Overseas Filipino Workers (OFWs) who venture into real estate investment. You can start a virtual tour now or visit Camella’s house catalog.