FOR PINOYS PERSONAL FINANCE Spending
9 Smart Ways You Can Spend Your 13th Month Pay this Year
December 14, 2016
It’s the time of the year again when 13th month is here. You may have a list of ideas on how you’re going to spend it but hinay-hinay lang kapatid. There’s nothing wrong in buying your wants with your extra cash but if you want a change then you might want to think again and become a wise spender. Here are 9 smart ways you can spend your 13th month pay and get the most out of your bonus this year.
- I did a complete post All About 13th Month last year. Please read here >>>
Under Presidential Decree 851 also known as the 13th Month Law additional monetary benefit for employees from their employers must be given to enable a better Christmas and New Year celebration to the labor force.
According to www.payrollhero.ph all rank and file employees regardless of their designation or employment status who have rendered at least one month during the calendar year are entitled to a 13th month year. The 13th month pay shall be in the amount not less than 1/12 of the total basic salary earned by the employee within the calendar day.
In 2015 a higher tax exemption for 13th month pay was pushed. Employees whose 13th Month Pay is below 82,000pesos will not be taxed. However if your 13th Month Pay surpassed the 82,000pesos bench mark you need to pay 30% tax.
Basic salary includes the earnings paid by an employer to an employee for services rendered. This does not include allowance, monetary benefits or any amount outside the employee’s regular pay. For example Juan’s basic salary is 21,000pesos with 2,000 transportation and meal allowance. Only the 21,000pesos is considered in the computation of 13th month.
Here’s a sample of computation of 13th month pay based on different employee types:
Monthly Pay: 21,000
13th Month Pay: 21,000
Monthly Pay: 21,000
Number of Months Served: 6
6/12months x 21,000
13th Month Pay: 10,500
Monthly Pay: 21,000
Number of Months Served before resignation: 9
9/12months x 21,000
13th Month Pay: 15,750
If the employee have multiple employers he/she is entitled for 13th month from of his/her private employees with the same computation if he/she completed the calendar year, a new employee or a resigned employee. In case you are working in the government and works part-time to a private company you will only receive a 13th month pay from your private employer.
If you are on Maternity Leave you are entitled for a 13th month pay based on the number of months you rendered before you filed your leave. You will still receive two-month worth of salary.
Now that we have covered almost everything you need to know about 13th Month Pay let’s now reveal the smart use of 13th Month. Know that 13th Month happens only once a year so better to think wisely on how you’ll spend it. Here are my 9 smart ways you can spend your 13th month pay.
1. Buy/Spend for your hobby
We all have that one activity we excel at. Whether it be calligraphy, hosting, singing, dancing or blogging. Your 13th Month will definitely be useful if you invest on new tools or upgrade your existing equipment. Take for example buying a better camera for your blog photography. This will definitely make your blog stand out more. You can also use your 13th month to take online class or seminars that could hone your skills more. Another tip for bloggers like me is buying your own domain. Being a .com can make your blog more professional and trustworthy. Pangalan.com is my choice of domain provider. It’s a portal made for Filipinos and I love that the customer service they provide. Their .com and .net is even on sale for only 299pesos!!!
2. Reward Yourself
You can also use your 13th month to reward yourself with something you have been eying for the longest time. There are a lot of sales happening around the metro and upgrading your wardrobe or shoe collection can be a good option. You can also get a laptop to get started with your freelance work or a better smartphone you’ve always wanted. There’s nothing wrong in rewarding yourself as long as there is right balance between everything.
3. Take a trip out-of-town or abroad
Cross one of your bucket list and go for a weekend getaway local or abroad. Many revealed how travelling can change your perspective in life. From my personal point-of-view the travels I did this year has been life-changing. I met new people and discovered a side of me I never thought exist. You can also devote yourself on a soul-searching trip with your 13th month pay. Try visiting www.travelbook.ph for the best hotel deals you can avail. Or book your next trip now in this form.
4. Start a side business
5. Invest for your future
Another smart use of your 13th month pay is through investing. You can open a mutual fund, direct stock, UITF or any other savings account of your choice and become an investor. In my post How Do You Picture Your Retirement Age? I have mentioned how important planning for the future is. The best time to invest and make your money work for you is now. Below are recommended investment vehicle you can open with your 13th month pay:
Open other Mutual Fund or UITF account. I have reviewed a number of mutual fund and UITF you can choose from. Most of these accounts require 5,000pesos to 10,000pesos only as initial investment. Make sure to do your own massive research before investing. CLICK HERE to read my first impression posts on some of the best Mutual Funds and UITF accounts in the country today.
Open a St. Peter Life Plan. Last August I decided to invest in a life plan too just like my parents and I am glad to report to you that I’m done in my first year of paying. I have a detailed post on why I believe St. Peter Life Plan is an investment you can read here. In case you want to know more about St. Peter Life Plan or interested to invest too then send me a quick message at firstname.lastname@example.org I will forward to you the process on how to avail one.
6. Save on your Emergency Fund
An emergency fund acts as money cushion to help in you in case of unwanted/unplanned situation. Whether it be sickness, death in the family, loss of job or other unforeseen events you have an extra money to use. In Dave Ramsey’s Total Money Makeover it is said that emergency fund should be equal to 3-6 months of your expenses.
7. Pay-Off Your Debt
If you suffer from high-interest debts then this can be a good chance for you to finally be debt-free. Go pay debts that have long been giving you stress like credit card or 5/6 and make sure not to engage with debt anymore. You can read below posts on debt-management:
- Here’s a Strategy to Pay Debt Even with Low Salary
- SavingsPinay Debt Series | Day 1, Day 2, Day 3, Day 4, Day 5
8. Get a Life Insurance
If you want your 13th month to be ultimately useful for your benefit then why not talk to a financial adviser today and get yourself a life insurance. In case you already have one then you can use your bonus to increase your premium payment. Why you should get a life insurance? The main reason is because life insurance can replace your income if you die. Your dependents can still enjoy the kind of lifestyle they desire and your children can still fund their education thanks to life insurance. Life insurance is all about living a legacy and I know for a fact that it can be an intimidating financial decision to do. If you need expert financial advice you can contact Ms. Patty from Integra Financials at email@example.com or quickly give a call at 521-6300 local 4462. Tell her that you want to know more about Life Insurance and how it could benefit you and your family or future family as read in SavingsPinay.
9. Buy gifts for your parents, family and friends
The essence of Christmas is expressing gratitude to the people around you so what a better way to spend you 13th month pay than buying some presents to them. I remember the Christmas in 2013 when I bought a sofa for our living room. I felt so much joy to be able to provide one for my family. Until today we are still using the sofa. My eldest sister on the other hand bought a 21-inch flat screen TV for us which made everyone in the household happy. I suggest going to Lazada since they have a lot of gadgets and items for sale this season. You’ll definitely find one for each of your family member.
Final Notes from SavingsPinay
Personally I plan to divide my 13th month into three major expenses: emergency fund, new investment (direct stock) and rewarding myself. I have been super blessed with event hosting gig for the month of December and I can’t thank God enough for the talent He gave me. So far I can definitely conclude that this year is the best year ever in terms of my financial life. Now I can’t wait for 2017 because I’ll surely double (and even triple) my hard work.
How about you? Did you get your 13th Month Pay already? How did you use it? Or How do you plan to spend your extra money?
Izza of SavingsPinay promotes financial literacy for the young and young at heart by providing insights and tips on budgeting, saving, investing and online entrepreneurship. Aside from this blog she also writes at www.izzaglino.com, a beauty and lifestyle blog for frugal Pinays and manages, www.izzagevents.com, a wedding and event business since 2011. For inquiries, topic suggestions or future collaborations email her at firstname.lastname@example.org