Tuesday, June 6, 2023

7 Wise Ways to Spend Your Salary Bonus

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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 have 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.

One familiar experience among recipients of salary bonuses is that they feel they need to spend the extra money to earn a certain level of gratification even though they don’t necessarily need to do so. They end up buying unwanted items and the bonus vanishes without fulfilling its purpose.

But if you are serious about your financial future, you might want to rethink how you’ll spend this supposedly extra cash on hand.

Receiving a salary bonus is a big relief to all workers
Receiving a salary bonus is a big relief to all workers

Pay off outstanding bills

The best decision you can make out of your bonus is to pay off your existing debts. These may be unpaid loans, credit card bills, Pag-IBIG home mortgage, 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, pay them off as well. Being debt-free allows you to save money more efficiently.

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If you are convinced, you don’t have anything close to such bills, next in line with 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 up 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 finances. This can be a machine upgrade on the laptop you use for blogging, replenishing stocks, or new equipment in your sari-sari store, or adding funds to your investments in the stock market or mutual funds.

If you don’t have any existing business, consider investing in a new business. Just make sure you did prior research and have a solid business plan, as well.

This investment also covers SSS or Pag-IBIG contributions or recurring bills on your PhilHealth membership. By doing so, you can save your upcoming monthly income allocated for this purpose.

Invest in yourself

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Consider investing not just in your business but in yourself. You may enroll in 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 endeavor, 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 a 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.

Although your bonus is considered extra money, stretching its value by getting more out of 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 a 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 or hand-held devices.

Your bonus will go a long 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 to 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.

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 have yielded such profits the company wants to share back with 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 help put food on the table.

Such a bonus is a reward for your hard work and efforts for the whole year.

Build your emergency fund

As life as an OFW is uncertain — sudden employment termination, death by illness or accident, or human-made calamities — it is prudent for every Filipino working abroad to start an emergency fund on top of money remittance. An emergency fund is a liquid asset or cash that’s equivalent to six months’ worth of your household expenses you can use during the time off, you guessed it, an emergency. If such a 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 in 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 make for it. Or, if you are planning to move to a new house, add your gift towards a down payment or real estate agent’s fees.

In short, the money you earned as a bonus can also be put to good use as a stand-by fund for expenses you anticipate financing in the future.

Add financial security by buying insurance premiums

If you are looking for safe bets to spend your salary bonus, buying up insurance policies is one of them. There are multiple providers that offer a variety of coverage, from health to hospitalization, to pet, car, or home insurance. Think of what type of insurance you or your family may need.

PRU Life UK, for example, has health insurance to cover infectious diseases such as malaria or dengue fever. So this type of insurance will come in handy if such diseases are a seasonal threat in your hometown.

It is often hard to convince OFWs to part a portion of their income to sign up for something that is less tangible like clothing or gadgets. But believe us, it’s worth it! Talk to an insurance agent soon as you receive your bonus.


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 salespeople 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.

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