It goes by different names: performance bonus, salary bonus, Christmas bonus, and whatever other names it may be. But the feeling is the same: gladness over receiving extra compensation on top of your monthly wage.
Maybe you anticipate receiving it, and already has plans on how to spend it. Well and good, it’s your money and you have the final say on what to do with your bonus: upgrading your phone or shopping for a new pair of shoes.
But if you are serious about your financial future, you might want to rethink how you’ll spend this supposedly extra cash on hand.
Pay off outstanding bills
The best decision you can make out of your bonus is to pay off your existing debts. This may be unpaid loans, credit card bills and other forms of money you owe to someone else. Pay one with the highest interest rate first. If you owe money from friends or family, paying them off as well. Being debt-free allows you to save money more easily.
If you are convinced you don’t have anything close to such bills, next in line in your other contributions such as pensions, insurance policies and the like. This can be your SSS contributions, advance payment for Sun Life or Manulife insurance premiums. You’ll feel good you have managed to save for the next few months.
Grow your current investment
In addition to contributing to your existing insurance premiums in advance, it’s also a good idea to use your bonus on your business or personal investments. This can be a machine upgrade on the laptop you use for blogging, replenish stocks or new equipment in your sari-sari store or add funds on your investments in the stock market or mutual funds.
If don’t have any existing business, consider investing in a new business. Just make sure you made a prior research and have a solid business plan as well.
Build your emergency fund
As life as an OFW is uncertain — sudden employment termination, death by illness or accident or man-made calamities — it is prudent for every Filipino working abroad to start an emergency fund on top of money remittance. Emergency fund is a liquid asset or cash that’s equivalent to six month’s worth of your household expenses you can use during time of, you guessed it, emergency. If such fund already exists, boost it further with your salary bonus.
This fund doesn’t have to be for emergency purposes only. Your personal or family emergency fund will come handy during illness in the family or payment for school fees.
Prepare for upcoming expenses
If you are expected to pay a significant amount of money, prepare for it. For example, in countries where taxes are not automatically withheld, you can use your salary bonus to prepare for it. Or if you are planning to move to a new house, add your bonus towards down payment or real estate agent’s fees.
Invest in yourself
Consider investing not just on your business but yourself. You may enroll at short-term courses to enhance your skills or learn a new one. There are online courses that teach you new stuff like project management, music instruments, digital marketing or anything interesting to you. Education should be a life-long endeavour and nobody is too old to learn new things in life.
Contribute to your upcoming vacation
If ever you are planning for your next vacation, this might be a good time to make an early booking. That’s because a) you have the financial resource to do so (if you use credit card, settle the bill immediately) and b) it’s cheaper to book your flight and hotel way in advance than just a few weeks before your trip.
While it’s basically an extra money, stretching its value by getting more out for your travel plans is a rewarding experience.
Treat your family
It’s never wrong to spend time with your family. After all you have been away from them for a while. So to those who receive their bonus and have the chance to go home for Christmas, treat your family to a nice restaurant for long lunch out. By nice, we mean a place where you can get to spend quality time. Not noisy, not distracted by a stage performance nor hand-held devices.
Your bonus will go along way if you go with this route. You’ve probably gone abroad because you wish to bring your family out of financial problems and offer a better life. But sometimes, they prefer your presence than your material gifts.
When we say family, in this we assume it’s your nuclear family and not extended family, which can be too much for your budget.
Bonus: Treat yourself
You received your bonus from your company simply because you deserved it. After all, your efforts to contribute to the company’s well-being has yielded such profits the company wants to share back to its employees.
Also, you have spent the whole year looking after your family’s welfare through regular money remittances and sometimes emergency loans to finance someone’s studies, get someone treated at the hospital or helped put food on the table.
Such bonus is a reward for your hard work and efforts for the whole year.
Christmas bonus, year-end bonus, performance bonus or whatever you call it, it’s great to receive them at some point during your tenure at a job. But while you may be bombarded with marketing messages and sales people convincing you to buy this and that, don’t get carried away.
Do not forget your financial goals and plan how your bonus pay can fulfill these goals before making a decision.