How to Make the Most Out of Your Year-end Pay?
The holiday season is truly the most wonderful time of the year, especially that most employees look forward to their year-end pay. Malls and shops get more creative in their promotions to lure buyers who have just received their 13th-month pay, year-ended bonuses and performance incentives. But there are more ways to make the most out of your income apart from indulging in material possessions.
1
Go debt-free.
Most employees would usually commit to either save or invest whatever surplus income they have on hand. But the truth is, you cannot and you should not prioritize saving and investing without addressing your financial obligations first. Whether that’s a credit card debt, a personal loan, or your monthly amortization, the interests these are incurring are like money going down the drain.
Making advance payments can also help you cut interests and shorten the payment period. Managing your credit makes you a good customer of the bank or mortgagee and results in a good credit score.
2
Save.
Saving is never old-fashioned. This holiday season, saving up your bonuses is a means of gift-giving, not for other people but yourself. When you save money, it’s no longer just for the rainy days, it becomes a source of peace of mind.
It is best to save your money in a bank where it is more secure, earns interest and is accessible as soon as you need it for emergencies. To know how much emergency fund you should maintain, compute your total expenses for at least six months and the total should be your minimum emergency fund.
You may also consider starting your retirement fund. A comfortable retirement means being debt-free at least five years before your retirement, having multiple life insurance policies, minimal cash outflow and stable savings account that can support your monthly cost of living.
UnionBankers are encouraged to save for their future through our very own Retirement Pension Fund available at 1UHub.
3
Invest.
All investments involve a certain degree of risk. Depending on the type of investment you choose, the possibility to generate gains or losses is there. Therefore, the money you are investing should be on top of your savings and emergency fund. This money should also be something you can keep intact for a certain period.
The type of investments that you can consider are as follows:
Insurance
Life insurance as an investment is one of the good indicators of financial independence and security. It is a type of investment that guarantees financial coverage from the insurer if the person insured experiences a loss of income due to personal accident, permanent disability, dismemberment or loss of life.
Stocks
It lets you invest your money in different businesses in the Philippines or around the world. Buying stocks means you are investing in partial ownership of a company. Investing in stocks can bring good returns when you buy from the right companies, at the right time. However, it can also be risky due to the changes these companies might experience at any time and reason.
Retirement Fund
This type of investment ensures that you have a stable cash inflow even when you stop working. This will cover your living, medical and leisure expenses. The earlier you make this investment, the bigger retirement fund you can generate when you reach your retirement age.
Education Fund
This investment is a means of saving up for a child’s education, it also ensures that the fees are continuously paid for even if the head of the family losses financial capacity.
4
Spend on necessities.
Aside from saving and investing, having an extra source of fund is the perfect opportunity to spend on necessities that you may have delayed for a while. For example, replacing old appliances at home that are no longer cost-effective, like your air conditioner and refrigerator. Buying the latest appliances would also mean energy efficiency and savings on electricity cost.
According to studies, we spend 2/3 of our lives sleeping and walking. Therefore, the two most important things that we should spend on are our shoes, and our mattresses and bedding. Purchase new bedding in time for the cold season, consider upgrading your mattress depending on the age and comfort level or get a new pair of comfortable shoes and exercise more for the new year.
5
Spend on experiences.
Whether it is for you, your significant other, or your kids, spending on experiences means investing on a memory of a lifetime. Go to a theme park, a spa or a museum during the holidays. You can also start planning your vacation for next year and book a local or an international trip. Travel agencies, airlines and hotels usually go on sale during the holiday season for the next year’s lean season.
While it is necessary to reward ourselves once in a while, there’s nothing more rewarding than knowing that you have control over your money. This is one of the ways of becoming financially free and having that sense that you #ownthefuture. Material things go obsolete and possessions won’t improve your relationships, but memories, experiences, and peace of mind matter.
