5 Tings to do with your 13th Month Pay

Booyah! I’m sure everybody is counting the days because we (yes I’m included) are all excited for our 13^th month pay. After all those hard works and overtimes we are finally getting what we arbitrarily call “simbolo ng pagyaman.”

But before you spend your 13^th month pay, let’s do some reality check first. I have here some few things that you can do with your bonus in order to increase your financial stability.

1.  Donate some

The value is giving is very important when you want to gain financial stability. It gives you the sense of fulfillment and sense of humility. As a suggestion you can give alms to the beggars, donate to the church and the charity and give some cash gifts to your families.

 2. Save 20% for your emergency fund

The essence of having a cushion fund or emergency fund is widely discussed in my blogs because I believe that this fund is as important as having life insurance. So every time you receive money put away some for this.

       3. Pay your consumer debt

Have you been naughty these past few months with your credit card? Well I guess this is the right time to pay up every single centavo that you owe from the credit card company. Trust me, there’s nothing more liberating than not acquiring consumer debt. J

       4. Get a health insurance

Life insurance is a very common knowledge in the Philippines nowadays while health insurance maybe a subject that needs wider audience. If you have company health insurance then well and good but if the company does not provide then I suggest you need to get one on your own.

Read how Paul and I got our long term health insurance here.

       5. Get a life insurance

As mentioned, life insurance is very common here in the Philippines but most Filipinos do not have proper insurance nor have knowledge on how to compute for the right coverage. Still having coverage is still better than not having at all. I suggest you divert some of your bonus to get a life insurance. Better talk to a financial planner first so that together you can compute how much protection you need.

It is always nice to have the latest gadgets, best outfits, cool entertainment system and the likes especially during the holiday season. But we should not forget about our financial stability in exchange of the pretty little things we can do without. 

Advance Merry Christmas! J

Credit Card as Emergency Fund?

Most of the people I have talked to consider credit card as an emergency fund. They will always tell me, “At least if an emergency, like hospitalization occurs, we have something to present at the hospital.” And I always tell them, "Can’t you make it with your cash?” Then they will reply, “Well, you know what, we have no cash at the moment that is why we need credit cards.”

Emergency funds and credit cards are two different things. You cannot treat the two as synonymous and similar.

Emergency fund is a part of our financial foundation. This is like a solid wall you can lean on. Why? Because it will act like a cushion if an emergency situation occurs. Imagine you are a bird and then a hunter came, aimed towards you and “Bang!” Your right wing was shot. You don’t have an option but to go down. You panicked. You didn’t know what to do. You are not prepared for this. You were going down so fast that you hit the ground head first. Then you died. What if this happens to your finances? You are a happy go lucky man. You live your life each day like there is no tomorrow. You shop too much, play so hard and eat like a king. Because of your lifestyle you got sick. You don’t have an emergency fund and nothing to present to the hospital.

Let’s go back to the story and pretend that you have a credit card as your emergency fund. If you get sick you charge the fees to the card. Yes you will be treated. Yes you can go out of the hospital. But because you don’t have spare cash you are forced to pay every payday depending on the amount. What if your 15-day salary can’t cover for the expenses? What if your 1 month salary can’t cover for it? Worst, what if your 2 month salary can’t? That will be the time your hospital debt will incur charges and fees. Instead of paying for the principal alone you are forced to pay for the interests and charges.

Imagine you saved three to six times of your monthly income and put it in a bank? You got sick and was charged 4 times of your monthly salary. Will you not be able to pay for it right away? Will you be happy to go out of the hospital, treated and free of debt?

Emergency funds are not just for hospital bills. They are for emergency situations. Like a sudden flood, house repair and most of all job loss. Can your credit card cover for your needs when you lose your job? For a month maybe but not for three months.

~till then