How to Manage Your 13th Month Pay

The RFP Strategy for Holiday Wealth Professional Stewardship and Financial Growth by David Angway, RFP.

[0:00] – How to invest your 13th-month pay? Turning a holiday bonus into long-term wealth.

[2:15] – What is the "One-Day Millionaire" syndrome? Why does your Christmas bonus vanish quickly?

[4:40] – How to stop overspending your holiday bonus? Overcoming cognitive bias in windfalls.

[7:10] – The 50-30-20 rule for 13th-month pay: A professional framework for bonus allocation.

[10:25] – Should I pay off debt or save my bonus? Prioritizing credit card payments over investments.

[13:50] – Best investments for 13th-month pay in the Philippines: Pag-IBIG MP2 and digital banks.

[17:15] – How to stop impulse buying during holiday sales? The 48-hour psychological rule.

[21:30] – How to spot financial scams on social media? Protecting your bonus from fake profiles.

[25:45] – How to avoid the "January Financial Hangover"? Creating a budget before your bonus hits.

[29:20] – What are the biblical principles of stewardship for bonuses? Managing your blessings.

Maximize Your 13th Month Pay: A Registered Financial Planner’s Guide to Holiday Bonuses

Aru: Welcome back to Entrepinoy Espesyal! Today, we are focusing on the financial aspect of being an employee and an entrepreneur. We’re talking about the 13th-month pay and Christmas bonuses.

How do we use this blessing from the Lord correctly?

Joining us is a top-tier Registered Financial Planner, the founder of the Given Today podcast, David Angway. Welcome back, Sir David!

David: Thank you, Aru! I’m happy to be back. This is a very timely topic because everyone is excited about their bonuses, but without a plan, that money can vanish instantly.

Frequently Asked Questions (FAQ)

Aru: What is the biggest mistake people make when they receive their bonus?

David: The "One-Day Millionaire" syndrome. People often spend the money before they even receive it. They have a "mental list" of things to buy, which usually leads to overspending. You need to treat this bonus as a tool for your future, not just a reason to splurge.

Aru: How should we ideally divide our 13th-month pay?

David: I highly recommend the 50-30-20 Rule. It is a simple but powerful framework:

• 50% for Financial Goals: This should go toward your emergency fund, long-term investments, or your "freedom fund."

• 30% for Obligations: Use this to settle debts, pay for annual insurance premiums, or cover upcoming school fees.

• 20% for Celebration: This is your "Happy Money." Use it for gifts, Noche Buena, or a small treat for yourself.

Aru: Should I pay off my debt first or start saving?

David: If you have high-interest debt, like credit card balances that charge 3% a month, pay that off first. That is a 36% "return" on your money because you’re stopping the interest from growing.

However, if your debts are manageable, ensure you still set aside a portion for your emergency fund. You need a buffer so you don't have to borrow money again when an emergency hits in January.

Aru: Where is the best place to put the "Savings" portion of the bonus?

David: It depends on your goal:

• For Emergencies: High-yield digital banks are great because they offer higher interest than traditional banks.

• For Mid-term Goals: Consider Pag-IBIG MP2. It’s tax-free and historically offers good dividends.

• For Long-term Wealth: Look into index funds or diversified stocks if you don't need the money for 5 to 10 years.

Aru: How can we avoid holiday "overspending"?

David: Be intentional.

1. Create a Gift List: Set a strict budget for each person.

2. Avoid Impulse "Sales": Just because it’s 70% off doesn't mean you're saving money if you didn't need the item in the first place.

3. Give Every Peso a Job: Before the money hits your account, write down exactly where it is going.

Clean Takeaways

• Financial Stewardship: View your bonus as a resource to manage, not just spend. Stewardship leads to peace of mind.

• The 50-30-20 Strategy: Dedicate 50% to goals, 30% to obligations, and 20% to personal enjoyment to maintain balance.

• Kill High-Interest Debt: Use the bonus to stop the "leak" in your finances caused by credit card interests.

• Beware of Scams: Be careful of "investment opportunities" that sound too good to be true during the holiday season. Always deal with verified and licensed professionals.

Aru: Thank you, David! This is a great reminder to be responsible with our blessings. Where can they find you?

David: You can reach me at davidangway.com. Please follow my verified Facebook page David Isaiah Angway (look for the blue checkmark) to avoid scams. You can also call or text me at 0968-854-7326 for specific concerns. Happy planning and Merry Christmas!

For professional financial consultations or to report scams, visit davidangway.com.

The Psychology of the Bonus: Avoiding the "One-Day Millionaire" Trap

Receiving a 13th-month pay or a holiday bonus is a financial high, but Registered Financial Planner David Angway warns against two psychological traps that often lead to a "financial hangover" in January.

1. Beware of "Mental Accounting"

Most of us fall victim to Mental Accounting—a cognitive bias where we treat "bonus money" differently than our monthly salary.

• The Trap: We tend to view a bonus as "free money" or a "gift," making us more likely to spend it impulsively on luxuries we wouldn't normally buy.

• The Reality: Every peso has the same value. Whether it comes from your regular paycheck or a holiday bonus, it should be allocated with the same discipline.

2. Breaking the "One-Day Millionaire" Syndrome

In the Philippines, the "One-Day Millionaire" syndrome is a common cultural phenomenon where an individual spends their entire windfall or bonus in a single day of celebration, leaving nothing for the rest of the month.

• The Strategy: David suggests the 48-Hour Rule. Before checking out that expensive item in your cart, wait two full days. Usually, the "high" of receiving the bonus fades, and your logical brain takes over, helping you realize the purchase isn't necessary.

The Solution: Give Every Peso a Job

To combat these traps, David recommends moving from impulse to intent. By using the 50-30-20 Rule, you create a roadmap that acknowledges your hard work while securing your future:

• 50% for Goals: Plugging the holes in your financial bucket (Emergency Funds).

• 30% for Obligations: Clearing debts to start the New Year with a clean slate.

• 20% for Celebration: Enjoying your bonus without the guilt of overspending.