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The Christmas season is here and so is your 13th month pay. After a year of seemingly humongous workloads and endless list deadlines, a reward of some sort is finally in your payroll account — the awaited 13th-month pay!

As a form of monetary benefit, the 13th-month pay is given to every rank-and-file employee, as mandated by The Labor Code of the Philippines. Every employer is required to give this non-taxable pay not later than December 24. Even an employee who has resigned within the year is entitled to a 13th-month pay upon separation, provided that he or she has worked in the company for at least one month.

An extra full month’s pay, however, just like regular wages. If we’re not mindful of our spending, our 13th-month pay can be gone before we know it. It is especially tempting to spend on full swing this season because of Christmas sales at every mall. Before rushing to the mall to buy that major purchase you’ve been eyeing for the longest time, though, here are three smart ways to spend your 13th month pay:

1. Save

Saving up is often overlooked when there’s so much we want to buy. Setting aside a part of your pay is, in fact, the ideal first approach to hard-earned money. Take Murphy’s Law for some solid advice in that, “Anything that can go wrong will go wrong.” Before you give yourself a headache thinking about where to get finances, you can open a savings account (if you still do not have one) and deposit amounts that you could use for medical emergencies that your HMO (health maintenance organization) may not cover — minor operations, accidents, and even major illnesses. You can also start saving up for predictable expenses such as income tax returns.

If you still have no clue where to use your pay, avoid spending compulsively and carefully contemplate before shelling out your hard-earned cash.

2. Invest

After paying off your debt, invest your 13th month pay excess into something that will be beneficial for you. Have your life and health insured. Attend seminars and conferences, and upgrade your tools (cellphone or laptop) to boost effectiveness at work and your career. It might be your first year as a working adult but building up your retirement or endowment fund as early as now can save you in the future. Investing to earn can rake in additional profit. Mutual funds are among the affordable investments while the unit investment trust fund is a collective investment scheme offered by banks. Pooled funds are managed by banks and their fund managers. If you’re feeling slightly more aggressive, stocks are the way to go. However, they are more unstable. You can also consider venturing into franchise business and social enterprises.

Just keep in mind that arming yourself with enough information about investing is crucial to success. Read up on investing and learn from an expert through seminars.

3. Indulge

Indulging seems counter-intuitive with smart spending but saving up does not mean depriving yourself of rewards you deserve for working hard. Once you’ve settled your savings for the future, take your family and yourself to that destination you’ve always wanted to visit. Treat yourself to that shopping spree you’ve never had the time for, including that shoe you’ve always wanted to wear. Spend your day at the spa. Get your nails and hair done, too. Relive your carefree, student days at the theme park with your friends, even just for a day. Donate, share your blessings and give back to a community or cause you feel strongly about. Do something – anything – that will make you happy. Bottom line is, indulge in moderation. To make it easier to manage your ‘fun’ money from your savings or retirement fund, have separate accounts depending on their purpose.

While there may be millions of ways to spend that much-awaited 13th-month pay, always choose to spend it wisely. A month’s worth of pay can last for years.


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