Written by: Mitch De Guzman
What makes the Christmas season the happiest time of the year, besides reuniting with family and friends and taking pleasure in all that life has to offer? It is, indeed, the Christmas bonus. Employees and their families eagerly await this since it will help them pay for their holiday shopping and other expenses.
Thoughts may have been running through your head as you waited for the extra money to come in. Perhaps you have been thinking about getting a fiber internet connection after realizing the importance of connectivity in today’s world. Whatever you choose, consider twice before investing your hard-earned money.
5 Clever Ways to Spend Your Christmas Bonus
There are numerous ways to spend your bonus or 13-month pay wisely. You can use it to buy gifts for yourself or your loved ones, go on vacation or have a sumptuous dinner with the family. Whatever you decide to do with it, make sure you enjoy every minute of it.
However, we must not overlook the lessons learned from the pandemic and the substantial impact on several businesses, resulting in the displacement of thousands of workers. Even if you are not one of them, you should consider how to maximize your Christmas bonus before spending it. Here are some clever ways to spend your year-end bonuses.
1. Pay yourself first
How frequently have you heard the expression “money is like the wind”? – dissipating as quickly as money appears due to mounting household bills. Well, that should not be the case. While they are vital expenditures, you should still save a portion of your bonus or base pay before spending it. You may begin with a small percentage, say 5%, and gradually increase it to meet your demands. What matters is that you develop the habit of saving money.
2. Invest in Yourself
The most valuable investment is something that can never be taken away from you. Investing in yourself allows you to maximize your potential and earn extra money. That is, honing your skills and maintaining good health, as well as broadening your knowledge and competence. So, go ahead and enroll in training classes to improve your skills and put yourself ahead of the competition in the coming year. Also, get a complete health check-up, primarily if you work as a virtual freelancer because your clients are unlikely to provide one. Knowing you’re in excellent physical condition will boost your confidence.
3. Set aside a contingency fund
The pandemic has shown us the value of being financially prepared for unforeseen disasters. Since we don’t know how long they will persist (covid has been out for nearly two years), having an emergency or rainy-day fund will help us get through the difficult times. Ideally, it should be six months’ equivalent of household overhead costs, but setting aside more will be much better. It will also be wise to put your contingency fund in a solvent account that pays a higher interest rate than a regular savings account, such as short-term time deposits, treasury bills, or mutual funds.
4. Eliminate or Reduce Debt
Debts are unavoidable, yet they have detrimental effects on your finances. Worse, they can make it challenging to save for future needs. On the other hand, a plan can help you reduce your responsibilities while freeing up funds for savings. Outlined below is the technique.
- Make a list of your financial obligations.
- Settle the lowest debt and the minimum monthly on all other liabilities.
- Once you have finished paying off the smallest loan, proceed to the next until you have written off all your loans.
5. Make your Money Grow
Since bonuses are hard-earned money, you should put it to work for you. There are numerous assets to consider depending on your budget, financial experience, and risk tolerance. Financial advisors will guide you through the process if you don’t know how to go about it. Time deposits, stocks, UITFs, mutual funds, bonds, endowment plans, and real estate are just a few viable alternatives that can make your money grow and multiply enormously over time.
The Reason for the Season
Finally, don’t lose sight of the reason for the season by sharing your blessings with others. Give our family and friends meaningful gifts or donate to charities or cause-related organizations as well. Keep in mind the saying. “It is better to give than to receive.”
Now that you’ve acquired some ideas on how to spend your bonuses, let’s take a trip down memory lane and learn how bonus payments came to be to get the most bang for your buck.
Did you know?
Christmas bonus and the 13th-month salary are not the same. In the Philippines, though, they have become interchangeable.
Christmas Bonus and 13-month pay
Holiday bonuses are incentives given to employees as a goodwill gesture by their employers. In other words, it is a tax-free amount given to an employee over what is required by law. It can be a reward or enticement for meeting a goal or contributing to the success of the employer’s business. Unlike the 13th-month pay, holiday bonuses are totally at the employer’s discretion, which means it is entirely up to him whether or not to grant them. Therefore, it is not a demandable or enforceable obligation.
Conversely, companies must pay their rank-and-file employees the thirteenth-month pay regardless of their employment status. That is, whether you are a regular, probationary, or contractual employee, you are entitled to 13th-month pay if you have completed at least one month of employment.
It is also stipulated in the presidential decree that the 13th month’s pay shall not be less than the worker’s basic salary and should be paid no later than December 24 of each calendar year. Employers, on the other hand, can deliver it before Christmas Eve. Many businesses now pay in two installments, with half due at the start of the school year and the other half due in the weeks running up to Christmas. This strategy benefits not just the companies but also employees who earn extra money for school and holiday expenses.
Origins of Christmas Bonuses
Although its origins are uncertain, this practice dates back to early civilization. In ancient Greece and Rome, merchants would send out little presents to their customers as a sign of appreciation for their continued patronage throughout the year. The practice is controversial since it is associated with bribes and payoffs. Nonetheless, businesses have adopted it, becoming a holiday tradition.
American corporations began substituting traditional Christmas gifts for employees, such as turkeys, watches, sweets, or gold coins, with monetary benefit at the turn of the twentieth century. Eventually, bonus payments became more consistent. Depending on the company’s performance, the sum can range from 10% to one month’s salary.
Christmas Bonus Perks
There are various benefits to receiving and disbursing incentive payments. Employers can use it as a productivity incentive bonus to motivate employees to achieve above expectations without increasing pay. As a result, employees may be intrinsically motivated to work harder in the coming year.
On the other hand, employees can express their appreciation to their employers for providing them with a job and excellent working conditions. Additionally, giving discretionary bonuses can also help with employee retention.
Who gets Christmas bonuses?
Employees who showed exceptional performance at their jobs throughout the year may be eligible for Christmas bonuses. Again, it is not a statutory or mandatory requirement under Philippine labor law.
Nonetheless, firms may provide bonuses to their employees on top of the 13th month’s pay based on their employer’s discretion, the CBA (collective bargaining agreement), and any other arrangements they may have made with the workers’ group. This benefit could be specified in the employment contract as a discretionary or productivity incentive bonus.
Exceptions to the 13th-month pay rule
While 13th-month pay is necessary, there are several exceptions. The following individuals are not entitled to receive thirteenth-month pay under the law:
- Those who are already receiving a 13th-month pay or more in a calendar year;
- Individuals working in the personal service of another
- Employees who are paid solely on a boundary, task basis, or purely commission;
- Individuals who receive a fixed amount regardless of how long it takes them to complete a task. Unless it’s on a piece-rate basis, the employer must pay the required 13th-month pay to such workers.
Discretionary and Nondiscretionary Bonus
To clear up any doubts, bonus payments fall into two categories.
Discretionary bonuses are at the sole discretion of the employer. It is not included in the employee’s contract. Hence, employees cannot demand these types of incentives. Additionally, there are no defined limits on the amount of these bonus payments. In short, bonus pay doesn’t have a fixed amount.
In comparison, nondiscretionary bonuses are paid in accordance with a pre-negotiated employment agreement between the employer and employee. The agreement is typically linked to productivity, quality, attendance, or some other sort of performance. In other words, employees who perform well in their roles will receive a reward aside from their regular earnings if they meet the criteria. Hence, nondiscretionary bonuses must be factored into the regular rate of pay or employee compensation. Some examples are longevity pay, hiring, attendance, profitability, and more.
14th- Month pay
Legislators are currently debating whether to enact laws requiring all workers to get a 14th-month pay. While it is still pending, they have urged corporations operating essentially or those who are financially sufficient to offer the bonus pay to their employees because they have assisted these businesses in remaining strong and operating in the face of the raging pandemic.
Nonetheless, the 14th-month compensation law requires all public and private employers to provide 14th-month pay to their employees, regardless of whether they are salaried or hourly. These comprised government-owned and private subsidiaries, as well as controlled corporations.
Points to Ponder
While Christmas spending habits can vary depending on your financial circumstances and demands, one fundamental rule can help you decide how to spend your money effectively. That is, to constantly weigh the repercussions. You are not obligated to spend money simply because it is Christmas.
If it makes more practical sense to save some of the money until it is needed, do so. However, don’t hesitate if purchasing something has a higher long-term worth than putting the same sum into a savings account. You deserve it! Remember that you earned your Christmas bonus; hence you should use it to its fullest.
Even if a bonus pay has many advantages, it is critical to remember that you earned it. Thus, it would be best if you used it responsibly. For example, a fiber internet connection is a sensible investment. It will enable you to do much more in your career or business. Even if it’s just for home or personal use, like streaming your favorite shows and movies, fiber internet connectivity makes it easy.
The Most Effective Christmas Bonus Spend
With the Christmas season not too far off, we know you’ll be looking to spend your well-deserved bonus in a way that benefits you for generations to come.
The best thing you could do is invest in something that gives you a return on your money that is sure and steady. A wise investment to make is having a reliable fiber internet service installed in your household. And what’s the most promising internet service provider in the Philippines -it’s Streamtech.
Streamtech is the newest internet service provider in the Philippines with a top-notch fiber-optic internet service that’s beyond your expectations. Our wide-ranging availability and speedy connection leave no room for doubt as to why we are called the next big thing in the internet market.
On top of that, our customer service representatives are always available to assist you with any concerns. You can also communicate with our newest support and assistance mate, Viber Superbot SAM. To gain access to our Viber Superbot’s fantastic features, follow these simple steps:
1. Go to http://tinyurl.com/sambystreamtech.
2. Press the “Get Started” button.
3. Then, chat with SAM.
Holiday Greetings from Streamtech
We at Streamtech are honored that you have chosen us as your preferred internet service provider. As our way of saying thank you, we will be giving out unique presents to new subscribers during the Christmas season. So get out there and spread some holiday cheer. Even better, surprise your loved ones with this wonderful connectivity gift.
Learn more about our holiday promotion and affordable packages by visiting our official Facebook page. Visit our website for a more in-depth look at our products and services.
