Christmas songs everywhere.
Red tag sale in malls.
Ecstatic spirit for the upcoming holiday.
These are some of the few signs that we are just counting the days away till Christmas. For most of us, Christmas is our favorite season. This is a season of giving. This is a time for reconciliation. This is also the best time of the year to celebrate the blessings that we received for the whole year. And part of these blessings is our Christmas bonuses. Yes you read it right! Bonus is coming to town!
Just recently, I had a coffee with my client, and she asked, “Sarah, I have been working for six years now. And I’ve been receiving 13th and 14th month pay and other Christmas bonuses every year. But sad to say, I can’t even remember where I spend those extra money. What is the best thing to do with my bonuses this year?”
I believe that her question, are your questions too. With this, I want to share to you the 5 simple tips on how you can spend your bonuses wisely.
If you have credit card debts or other personal loans, this is the best time to get rid of them. I believe that bad debts are one of the destroyers of a healthy financial life. If you have multiple loans, you may choose to pay first the debt with the smallest balance (snowball method) or the debt with the highest interest (avalanche method). You may seek the help of a financial planner to assist you on which method of paying debts is best for you.
2. COMPLETE YOUR EMERGENCY FUND
Emergency fund is a fund set aside for emergencies like sudden death in the family, hospitalization, or loss of job. This is different from your savings and investment. As a rule of thumb, you should have at least an emergency fund of 3 to 6 months of your monthly expenses.
3. INSURE YOUR SELF
If you still don’t have insurance, you may consider insuring yourself. Or if you already have an existing one, you may consider increasing your life insurance coverage, if needed. Having insurance is one of the basics in financial planning. This will replace the income that you are contributing to your family or a gift to them in case something will happen to you. A financial planner can help you compute the ideal amount of your life insurance coverage.
Do you want to see your Christmas bonuses grow throughout the years? Then invest! Investopedia defines investing as the act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit. If you want to earn from your bonuses, invest it an instrument such as stocks, bonds, or businesses which earns higher than the interest of your savings accounts. Your choice of investment instrument will also depend on your time horizon and risk appetite.
You may give a sacrificial love offering to your favorite ministries, help your favorite charity, and even give something to yourself- something that will benefit you over the years such as learning new skills or enrolling in a short certification course.
Are you excited to receive your bonuses? Hope you spend it wisely!
PS. If you want to have a concrete plan on how you can manage your bonuses and hard earned money, let’s talk about it. I would be glad to help you.
We, your FinancePH advisors, will be glad and more than willing to help you plan your finances. Our customized financial planning approach caters to each individual needs, budgets and priorities.
If you wish to do a financial consultation with a FinancePH advisor or want to request a proposal/quote just click here.We will assign you to the best available advisor near your area.
ABOUT THE AUTHOR:
Sarah Grace N. Esteban, CPA is a financial advisor at FinancePH and the Director of Publications and Communications of the League of Young Financial Educators (LYFE), a non-profit organization which seek to help young individuals to be financially literate. Aside from her advocacy, she loves to write because she believes in changing the world, one reader at a time. You may reach her through her personal blog www.sarahgraceesteban.com.
If you want her to be your financial advisor contact her at firstname.lastname@example.org
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