How to Manage Your 13th-Month Pay: Expert Tips from David Angway

Entrepinoy Espesyal: How to Maximize Your 13th-Month Pay

Host: Kael (El Garcia)

Guest: David Isaiah Angway (Registered Financial Planner)

Kael: Welcome back to Entrepinoy Espesyal. Today, we are joined by a regular guest who manages nearly ₱1 billion in client portfolios and specializes in wealth and estate planning. He has been featured on TED, Bloomberg, and ANC. We are here to talk about a topic every employee is excited about: the 13th-month pay. Welcome, David Angway!

David: Good morning, Kael! I’m very excited to help our entrepreneurs and employees handle their bonuses wisely.

Frequently Asked Questions (FAQ)

Kael: What is the most common mistake Filipinos make when they receive their 13th-month pay?

David: The biggest mistake is "mental accounting" or spending the money before it even hits the bank account. Many people treat the 13th-month pay as "extra" money for luxury rather than a tool for financial freedom. To avoid this, I recommend the 50-30-20 Rule adapted for bonuses:

• 50% for Goals: Put half toward your emergency fund or long-term investments.

• 30% for Obligations: Use this to settle high-interest debts or upcoming annual expenses (like insurance or tuition).

• 20% for Celebration: It is okay to enjoy your hard work, but limit the "splurge" to 20%.

Kael: Should I use my 13th-month pay to pay off debt or to start an investment?

David: It depends on the "cost of money."

• Pay Debt First if: You have credit card debt or personal loans with interest rates higher than 10-12% annually. No investment can guaranteed-return 36% a year, but paying off a credit card saves you exactly that much.

• Invest if: You are debt-free or have low-interest loans. In this case, use the bonus to jumpstart a diversified portfolio.

Kael: For those who want to invest their bonus, where should they put their money for the long term?

David: Don't just look for "the best return"; look for the best fit for your timeline.

• Short-term (1-3 years): High-yield savings accounts or Digital Banks.

• Medium-term (3-7 years): Pag-IBIG MP2 or Retail Treasury Bonds.

• Long-term (10+ years): Index Funds, Stocks, or Variable Universal Life (VUL) insurance if you need protection and growth. Remember, investing isn't a one-day event; it requires a long-term mindset.

Kael: How can employees avoid the "one-day millionaire" syndrome?

David: You need to give every peso a "job" before you receive it.

1. Write it down: Create a list of exactly where each portion of the bonus will go.

2. Automate: As soon as the bonus arrives, move the 50% for goals into a separate account that is hard to access.

3. Wait 48 Hours: Before making a big "luxury" purchase, wait two days. Usually, the impulse to buy fades.

Kael: Is it wise to use the 13th-month pay to start a small business?

David: Yes, but only if you have a plan. Don't just start a business because it's "trending." Invest in your skills first. Use a portion of your bonus for a certification or a course that increases your value in the marketplace. That is the investment that offers the highest ROI.

Summary of Strategies for your 13th-Month Pay

• Prioritize the Emergency Fund: Ensure you have 3-6 months of expenses tucked away.

• Debt Settlement: Kill high-interest debt to stop the "leak" in your finances.

• Invest in Knowledge: Use the money to learn a new high-paying skill.

• Plan the Joy: Budget for your Christmas gifts and celebrations so they don't lead to a "financial hangover" in January.

Kael: Thank you, David! These tips are exactly what we need to face the new year with a strong financial foundation.

David: Thank you, Kael! For those who want more advice, you can find me at davidangway.com or on my social media channels. Happy planning!