Received Your 13th Month Pay Recently? Here’s What You Can Do with It
During the holiday season, Filipino employees eagerly await the release of their 13th month pay. The Department of Labor and Employment (DOLE) defines this type of pay as a mandatory benefit provided to all rank-and-file employees who have served their company for at least a month during the calendar year.
While you have the option to spend your 13th month pay on the newest gadgets or luxury items, you can also look at this benefit as an opportunity to invest the money in more important matters in life. Here are some suggestions on how you can use your 13th month pay wisely:
Pay off Your Financial Obligations
Drowning in debt? This is the perfect time to use your 13th month pay to settle your personal loans, credit card bills, and even cash borrowed from officemates and family members.
When paying off your liabilities, you can use the money to pay your debts in full or use part of it to significantly decrease the amount you owe. Settling your financial obligations provides peace of mind and helps you on your way to financial freedom.
Beef up Your Emergency Fund
Apart from paying your debts, you can use your 13th month pay to create a rainy day fund, which is money that you can spend for unanticipated expenses and events, such as loss of employment, urgent health care expenses, and house repairs. You should place this fund on a checking or savings account for quick retrieval.
The general rule when building an emergency fund is that you should set aside at least three months’ worth of your salary. If you have a family of your own, consider putting more money on your rainy day fund (at least six months’ worth or more). Having enough money stashed away gives you an assurance that you can weather any financial dilemma along your way.
Get Life Insurance
Buying life insurance in the Philippines is another smart thing you can do with your money, especially if you are a breadwinner. Accidents happen and you’ll never know when they’ll strike. By insuring yourself, you’ll prevent your family or loved ones from becoming bankrupt.
Put Your Extra Money in Stocks
Investing in stocks isn’t exclusively just for the rich. Even ordinary employees who have some cash to spare can put their money in this financial instrument. More middle-class individuals, in fact, are investing in the stock market. A Rappler report revealed that the total Philippine Stock Exchange (PSE) accounts reached over one million in 2018.
Putting your money in stocks provides you with higher growth potential than savings accounts. Many banks in the Philippines offer a yearly gross interest rate of less than one percent. You can enjoy much more than that when you start investing in the stock market. An article from PSE Academy says that stocks historically offered an annual average of 10 to 12 percent if maintained for the long term.
Before you head to the mall and shop ‘til you drop, consider putting your 13th month pay in these financially savvy investments. By setting aside funds for your future and resisting the holiday shopping urges, you’ll have more money to buy the stuff you want in the future.