Every December, all employees are happy and excited to receive their 13th-month pay. Are you one of them?Before you do anything further, you need to grasp what the 13th month is and who is qualified for it.
What is 13th Month Pay?
13th Month Pay is a monetary benefit mandated by the government to all rank-and-file employees. It is one-twelfth of the employee’s annual wage, and it is paid no later than December 24th.
According to the Department of Labor, all rank and file employees who have worked for at least a month are entitled to a 13th month salary, regardless of the nature of their work or employment. It was signed under Presidential Decree No. 851, which requires businesses and employers to offer 13th-month compensation to their employees.
How to compute the 13th Month Pay?
The common formula to pre-calculate your 13th pay is basic pay x length of employment ÷ 12
For example, your month salary is Php 15,000.00 with 7-month work with your employer, so the computation is:
Php 15,000.00 x 7 month ÷ 12 month = Php 8,750 – is your 13th month pay.
Spend your 13th Month Pay Wisely!
It doesn’t imply you’ll be a millionaire in a day because you have your 13th month’s salary. We know you’re worth it to spend it because you worked hard for it, but we recommend you spend it carefully and hope you’ll consider these suggestions.
- If you have debt to pay – pay it now. One of your goals to prepare once we receive the 13th month pay is your Christmas wishlists, but we recommend that you should also have a debt list, so that you may be debt free over the season.
Whatever debts you have, such as credit card bills, loans, and so on, strive to settle them so that they do not add to your worries next year. - Start building an Emergency Fund. It is the most crucial fund to have on hand in case of emergencies. It is a smart way to prepare for any unexpected expenditures.
This can be used to pay for hospital expenses, housing repairs, auto repairs, and family or relative emergencies.
- Start Investment. Spending your 13th month’s income with investment is another sensible option. There are a variety of investment funds to choose from. You may go to the bank and enquire about it, or you can start it right now. It is not an immediate investment, but it will improve your life as it develops.
Aside from investment funds, you may also invest in stocks or real estate. However, we recommend that you conduct preliminary research or talk with a friend or family who has experience with this. - Get Insurance. You should get life insurance for yourself and your family as part of your future planning.
This life insurance can be used if you get into financial difficulties as a result of a loss or something else.It is not to prepare oneself for such circumstances, but to consider your loved ones in case anything unexpected occurs.
There are various insurance providers to contact. Begin your search by determining the best budget for you and the coverage that you believe would be beneficial. - Apply for a Retirement Plan. I know what you’re thinking: “It’s too early to start thinking about a retirement plan,” but the question here is, “When is the ideal time to start thinking about one?” ”
We advise against skipping and instead think about it. Most Filipinos do not establish a retirement plan, so when they reach the age of 50 or 60, they have no savings and no cash to enjoy life.
If you are between the ages of 23 and 30, take advantage of this chance. We referred to this time as “productive days,” because as you reach the age of 35, health and other expenditures begin to stack up. - Save it. We don’t advocate storing your whole 13th month here. We recommend saving at least 20% to 30% of the total.
It is critical to save in many methods so that when you have a need or a purchase to make, you have a proper budget to spend. - Spend it wisely. We all know that Christmas is the most costly season of the year. There are many temptations out there, such as new electronics, clothes, and brand new shoes, but you should be aware of your own restrictions. Always be practical. Instead than focusing just on the name, evaluate the quality and price.
- Treat your family. It may not be appropriate to everyone, but it is one of the finest habits to cultivate. Make your parents pleased first and foremost.
Takeaways
These concepts are just meant to serve as a guide for everyone as they prepare for the future. We all know that we all take various roads and make different judgments in life, especially when it comes to spending the money we acquire via hard work.
Our purpose here is just to emphasize that you are not only leaving one, but that you may leave every day if you have a family that needs you.
Consider this line: what will happen if you die, what will happen to your loved ones?