Personal Finance

The Christmas bonus is extra money given by employers to their employees during the Yuletide season. Depending on the company or employer, it can be just a little extra amount added to the paycheck or it can be a nice fat bonus serving as a reward for your good service all year through. No matter the amount, this extra money only comes once in a year, so it is but right that you put it to good use. Before you list down all the material things you want to buy, consider these ways on how to spend your holiday bonus the smart way:

1. Pay off your debt


If you are among those Filipinos that have high-interest debts like personal loans and credit card debts, it would be wise to use your Christmas bonus in paying them off so you can start the New Year with a clean slate. If you can’t pay them all, settle bad debts first.

2. Build or boost your emergency fund

In case you don’t have one yet, you can use your bonus to establish a fund that you can use should financial emergency arises. The money should be available if there’s any unexpected happening that requires significant amount of money to cope with. Among such emergency are death of a family member, medical emergency, losing a job, and unexpected home or car repair due to accident or calamity. If you already have an emergency fund, use your bonus to beef it up.

3. Invest in a life and/or health insurance


Those who don’t want their dependents to bear all the financial burdens in case the unfortunate happens should invest their Christmas bonus on a life and/or health insurance protection. For the life insurance, the ideal policy is one that offers coverage that’s 5 to 10 times your annual income. It is also a good idea to get a personal health and medical insurance policy even if you have an existing healthcare plan from your company.

4. Save for your retirement

You won’t go wrong in investing for your future. So better yet lock your entire Christmas bonus or at least a portion of it in your retirement fund. Don’t rely on your SSS pension alone; as early as now, do a comprehensive research on how you can start your own retirement plan and use your extra holiday money in that.

5. Use it as a start-up capital for a side business

Of course, it’s always a good idea to use your bonus in starting up a side business or something that could give you additional income. These days, it’s hard to rely on just one income stream, so might as well use your Christmas bonus in establishing another source of income.

6. Give back


Set aside a portion of your Christmas bonus and donate it to charity or to any organization as long as it will be used for a good cause. Giving back could also mean giving something to somebody who has also helped or inspired you before in one way or another. It could mean giving gifts to your parents or offering to the church that nurtures your faith.

7. Buy something you can use for work or for your business

It is also a good idea to use your Christmas bonus in something that could enhance your skills and could help you earn more. Example: if you’re thinking of earning extra income by working online, get yourself a good laptop and reliable internet connection.

8. Spend it for home improvements


Using your money in home improvements and renovation is also one way of putting it to good use. Remember that after a hard day’s work, there’s no better feeling than relaxing in a comfortable home.

9. Beef up your savings

It’s wise to put a part of your bonus into your savings account. If you have already developed the habit of saving regularly, start considering investing in mutual funds or Unit Investment Trust Fund (IUTF).

10. Reward yourself

You’ve worked real hard throughout the year, so why not spend a portion of your bonus in rewarding yourself. It doesn’t have to be expensive—it just has to be something you think you really like or deserve. It can be a material gift or a rest-and-relaxation treat like taking a trip or getting a full body massage or a complete rejuvenation package.

If you’ve decided to spend a portion of your Christmas bonus in a once-in-lifetime trip, it’s a good idea to also consider getting travel insurance. Compare travel insurance plans through GoBear Philippines and get one that matches your budget and best fits your needs.