Where do Filipinos spend their Christmas Bonus?

The Christmas bonus is a sizable amount of extra money employees receive either as part of their compensation benefits or a generous gift from their employers. Usually, Filipinos allocate their Christmas bonuses to three essential things: savings, buying gifts, and giving away cash during the holidays.

But there are more places where employees receiving bonuses can put their money. Before we dive into them, let us first differentiate the Christmas bonus from the 13th month’s pay.

Technically, the Christmas bonus is a separate incentive from the 13th month’s pay. For one, 13th month pay is a mandated government benefit for employees. On the other hand, giving out Christmas bonuses is at the discretion of the employer. Meaning there is no law requiring holiday bonuses, so it is totally optional for a company to give them out. However, many often confuse the two since they are both usually given out in December.

That said, Christmas bonuses often come as extra disposable money. Traditionally Filipinos spend this extra cash on the following:

Savings

We never know what will happen tomorrow, and it can cause a lot of anxiety. Saving money is one thing that can keep those anxieties at bay. The fact that you have something to draw from, no matter the emergency, can bring peace of mind and a feeling of security.

That said, it is a no-brainer why Filipinos allocate most of their Christmas bonus to their savings. Aside from the 13th month pay, this bonus offers more financial legroom for employees, especially with the holiday spending.

After coming down from the height of the pandemic, most households are still trying to recover previous drawings from their savings. Coupled with increasing inflation and high interest rates, we might see more households saving a more significant portion of their Christmas bonuses.

Christmas Gifts

It is hard to break tradition, especially when there are expectations. This includes gift-giving during Christmas. While this practice is present across cultures, Filipinos take it a step higher with great presents and celebrations.

Brick-and-mortar stores are once again open and online shops more accessible than ever. Given this, Filipinos will likely continue with the holiday shopping splurge in the near future.

Furthermore, P&A Grant Thornton, a consulting and professional services firm, sees sustained growth in spending throughout the holiday season despite high interest and inflation. This sustained level of expenditure is all thanks to increased savings and credit card options.

In addition, P&A Grant Thornton believes that “revenge shopping” is still in play. As such, the firm expects retail items and furniture sales to increase in demand, at least in the short term.

Cash Gifts

Aside from gifts, simbang gabi, and parol lanterns, giving cash gifts or aguinaldo is also an unmissable tradition during Christmas. Whether you are a godparent who does not know what to get for their godchildren or a late holiday shopper, a cash gift is your friend. However, some Filipinos simply like to give out cash presents during holidays as a form of thanksgiving.

When Filipinos receive something big like Christmas bonuses, they are more inclined to give out. Whether you are a niece or nephew or a passing caroller, expect that a Filipino household will hand out cash during Christmas.

How to wisely spend your Christmas bonus

Invest in yourself

You do not always have to wait long for the benefits of your investments. One way you could immediately enjoy the value of your cash outflow is by investing in yourself. Instead of meaningless splurges, invest in things that make you feel confident.

This could be spending on material things, skills, or a combination of both. If you are in the workforce, you might want to enroll in classes or buy courses that enhance your skills.

Alternatively, you can also buy things for your home office that can improve your productivity. And if you have fitness goals, you can use your Christmas bonus to invest in equipment or sign up for a gym membership.

Aside from making you feel good, such investments would also be worthwhile additions to your new year’s resolutions list.

Settle payables

Christmas bonuses are more or less extra money separate from your periodic expenses. One way you can put it to good use is by using the amount to settle pending taxes, debts, mortgages, and other outstanding liabilities.

Paying a debt as late as possible is logical, but only if the terms favor you. Paying off taxes and debts before their due saves you from paying higher interest in the future. More so if you are paying a debt like a mortgage subject to variable interest rates.

If you have credit card debt with a high-interest rate, paying them early is especially beneficial. In fact, you might even see an increase in your credit score. And when all of those are settled, you can better focus on other financial goals that improve your financial standing.

Build your emergency fund

Aside from building your savings, also consider securing your emergency fund. Unlike savings, which you can spend for various purposes, your emergency fund should strictly be for emergencies.

As a general rule, your emergency fund should be reserved for instances where you have expenses not covered by your insurance. This also applies to cases where your insurance covers the expenses, but they are still short.

Your emergency fund can help you stay afloat without hurting your budget. Some situations where it is especially helpful are job loss, car trouble, or when you need funds for emergency repairs to your home. Lastly, building your emergency fund is important if you are planning to invest in the future.

Consider starting a business

Suppose you have a higher risk appetite. In that case, you might want to start being your boss and venture into business. Your Christmas bonus is an ideal addition to your starting capital, especially if it is a particularly risky venture.

One advantage of putting your bonus in a business is that it can grow faster than in banks. However, it needs more of your time and effort. However, starting a business is rewarding once it is already running and earning for you.

Put your money into real estate.

Forget cars and the latest smartphones for now. Given the current state of inflation and interest rates in the country, you might want to put your bonus into a more stable investment. One that can grow even without devoting too much time or effort but still earn, like real estate properties.

Unlike most investments, real estate value only grows over time based on historical data. True, your money earns interest in the bank, but it might not be enough to offset the effects of inflation.

Investing in real estate preserves your money’s value and even appreciates over time. Furthermore, renting out competitive real estate properties can also provide additional income while not using them.

Now that the year is closing, there are more incentives when buying real estate properties, especially from trusted developers like Camella. Learn more about the properties that can help you hedge against inflation and earn passive income.