The year is about to end. Aren't you excited with the holiday season? Reunion with friends, Christmas parties, and gifts! What more can you ask for? And speaking of gifts, it's the time for raking in those Christmas Bonuses! With X number of clients, you can get as much as double or triple your normal pay! Is it time to splurge it all? I say no. Stop yourself. This extra money can go a long way. Don't believe me? These are tips to sensibly spend your Christmas bonus!
Reduce Your Debts During the year, we might have incurred several expenses because of impulse buys or emergency expenses. Remember, this money is costing you every month interest if you don't pay them in full. And psychologically speaking, wouldn't it give you peace of mind if you just reduce your debt to manageable levels? So first things first, try to pay off some of your debt!
Set Up an Emergency Fund Your accumulated debt might have happened because you don't have extra cash to cover your urgent expenses (or impulses!). Therefore, you need to have an emergency fund for this cycle not to happen anymore. An emergency fund is cash readily available (around 3-6 months standard worth of living expenses) just in case something bad happens. If you don't have an emergency fund now, better stash away some of your bonus to get yourself protected.
Considering Buying Health and Life Insurance You'll never know when sickness or misfortune happens in your family. The good thing is there are insurance vehicles to protect you from it. As a rule for life insurance, you can target policies amounting to 5-10 times your annual income, especially if you have dependents who can't earn on their own yet. As for health insurance, you can try to scout for the best plans for your needs. But I highly suggest to checkout Allcare's Health Insurance. What's good is that their insurance is designed for freelancers and covers almost all sickness unless specified not. You can even charge dental cleaning and grab rides as a perk! How can you top that?!
Invest on Another Source of Income If you have your finances figured out and you already protected your income with insurances, maybe you can start to use the money to produce other sources of income. There are available franchises that can be paid in installments. Also, you can start online businesses such as retailing in Shopify or Shopee for a minimal amount of capital. But better do your market research first to make sure you have a business plan. If you don't want the hassles of managing a business, you can also invest in UITFs for capital appreciation. There is also what we call a PERA account, which is similar to the Roth IRAs for your retirement. Just make sure to study the investment vehicle. Don't get into something you don't understand fully. No get rich quick schemes, please.
Give Back to Charity It's good to receive gifts. But isn't it fulfilling to just give back to other people? Charity can be a good gift to yourself and the needy. Go and organize a feeding program. Or better yet, just donate to the cause you're passionate about. It's a worth it expense for the extra blessings you receive for the year.
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Travel. Buy Things. Splurge For Yourself and Your Family! Getting rewarded for your hard work for the year can't be all for serious stuff. You need to allot a portion of it for something you really want to spend on. Go on. Buy that expensive gadget you're eyeing for. Spend that money for your family's dream vacation! Splurge that bonus money!! If you have set your finances well, you have all the right in the world to do so. With that, I hope you sensibly spend your Christmas bonus this holiday season. Have fun!