Most of us in the Philippines don’t get our bonuses til Christmas season.  Some of us get it quarterly or in the middle of the year.

I work for a company that has paid out bonuses both in the middle and at the end of the year.  They basically split the 13th month bonus (a mandatory gov’t benefit) in half.  The first half is given to the employee at the end of May, so that employees with kids could pay for enrollment and other school fees.  The other half is given on the first payday of December just in time for Christmas shopping.

For people who don’t understand our salary structure here in the Philippines, it’s basically this:

1. 13 month pay – required by the government.  If an employee separates from a company before the year is over, he still gets the pro-rated value of this bonus.  It’s normally factored into a salary as more of a forced-savings kind of thing.  This bonus is non-taxable up to 30k pesos.  Beyond 30k is taxed.
2. 15th and 30th paydays – most companies schedule paydays twice a month.  it’s normally the 15th and 30th of each month.  Other companies have it on the 20th and 5th of each month and others have their own schedules.  This is designed to help people budget their money for 15 days til the next payday comes.
3. Additional bonuses – are really up to the company.  Some companies give a 14th-16th month bonus, quarterly bonus or mid-year bonus.  This is usually dependent on the financial standing and performance/productivity of the company.  It’s not mandated by law so it could be cancelled by the company at any time.

So how do you normally spend your bonus?  Since you’d already know at what time of the year it’s coming, it’s always wise to plot your spending in a chart or list so that you could maximize the benefit of the bonus.

Many people don’t have a plan, that’s why they end up spending all of their bonus without having a chance to save any of it.

Ever since I started becoming financially conscious, I’ve decided to always have a plan of sorts for any money that comes in on top of my current salary.  Even if I am fully aware that my bonus is coming, I still treat it as “extra income”.

My advantage really is that I don’t anyone to send to school.  And the tendency of people like me is basically to buy the newest electronic toy in the market.  As long as you have planned to put your money there, no problem.  Just make sure you are prepared for any other spending you might have to do.

Stick to the essentials before rewarding yourself with a big ticket item.  What do you need now?  Do you need to repair your car or home?  Make a list of what you need to spend on and what you want to spend on.  That way,  you could prioritize.

Guide questions:

1. How much of this bonus should I put into savings? (I’d say answer this first before splurging on anything else.)
2. How much should I use to pay for my debt? (Credit card, loans…etc.)
3. Do I need money for my car or my house? (Unless you have established a separate fund for this, you need to ask yourself that question)
4. Do I have enough to invest in a business?
5. Do I have enough for my kids’/siblings’ school tuition and other fees?

and finally…

What can I reward myself with this money when I’m done allocating it to what I need?

Prioritize your spending specially when you come into a big amount of money.  This way, you will maximize the use of the most important employee you have in your life…MONEY.

Money doesn’t complain…doesn’t charge overtime…doesn’t take breaks and does all the work for you for as long as the price is right.  Make your best employee, money– work for your benefit.