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Personal Financial Planning: 6 Tips on How to Spend Your 13th Month Pay Better

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Personal Financial Singapore
Personal Financial Singapore

Another year is coming to an end, and with it comes one of the most anticipated events of a worker’s life – receiving the 13th-month pay! Also known as the Annual Wage Supplement (AWS), the 13th-month pay is not mandated by Singapore law but is a common benefit featured in employee contracts today.

It gives workers as much as an extra month’s income that can be used for personal financials in Singapore like spending for holidays, buying gifts, or even paying taxes.

However, money is always easy to spend, and before you know it, your AWS may already be gone in a matter of days.

Instead of living like kings or queens for a day, maybe you can consider starting personal financial planning. This way, you can make better use of the extra compensation that you will receive.


Here are some ways that you can consider to help improve your personal financials:

Clear Your Debts

Over the years, you may have spent a little more than you should out of necessity (or otherwise). Perhaps you are in debt from student loans, an unexpected medical expense, a new gadget, or even a vacation you took.

You may not be feeling the pinch too much because you stretch some of the payments over 12 or more months. However, these things could pile up easily. Eventually, your monthly payments may not be enough to cover all of them. Next thing you know, you could be falling into financial issues you thought you only read about.

You can use the extra income to clear some of these debts and start fresh. Consider this the sign to start planning and managing your budget properly.

Stash an Emergency Fund

If there’s one thing that the global pandemic taught us well, it’s that no job is always stable. Some of us were blindsided by budget cuts and even downsizing, with no immediate “plan B” to lean on.

One way where you could use your bonus is to start an emergency fund for unexpected events. This could help you have something to fall back on if you’re suddenly axed from a job or if you decide to pursue other opportunities.

Too often, people hesitate to quit a job even if they feel that it’s burning them out because it pays the bills. An emergency fund may not be growing by itself, but it could provide you with the necessary buffer you could use to be less dependent on your monthly income.

Also Read: Career Choice: How to Follow Your Head and Heart

Grow Your Savings Through Trading

Getting a bonus doesn’t come as often as our salary. If you think you have sufficient emergency funds, you can consider planting your bonus in investments. This way, your extra income can grow even more over time.

Trading in the stock market can potentially yield rewards over time. Cryptocurrencies are also gaining acceptance and could be an investment option. However, while the stock market is widely known, the MAS still cautions on investing in crypto because of its volatility.

Technology has made it easier for you to manage your portfolios. Robo-investing platforms are widely available to trade stocks, foreign exchange, mutual funds, crypto, and more.

Like cryptocurrencies, the stock market does have risks as well. However, the potential returns of investing in trading are far better than earning interest from your bank savings. Make sure to do your research if you decide to choose this route for your bonus!

Speak with Financial Advisors

If we want to learn how to cook good food, we turn to trusted recipes or chefs. In the same way, if we want to learn how to manage our funds, we can turn to those who are experts in the field.

Financial advisors or asset/wealth managers can help us allocate our budget to cater to our life or career goals. Connecting with trusted independent financial advisors can ideally give you a broad range of options in terms of insurance policies and investment opportunities.

As in anything you’re going to spend your money on, it would be wise to do your due diligence on companies before making the leap. Do your research and ask your close circles about their experiences and recommendations.

Even when you already have a financial advisor, don’t stop learning about where your money goes. Like in cooking, you can also consider their advice but the decisions should still be in your hands.

Invest in Yourself

Your year-end bonus is a well-deserved reward for the hard work you put in throughout the year. It only makes sense to spend it on yourself.

You can use it to enrol in a short course to add to your credentials or improve your current skills. This can help open more opportunities for career growth in the future.

If you have one yet, you could also consider getting covered by insurance. It can help protect you and your loved ones if anything unforeseen happens to you. Some insurance companies also offer investment options that you can withdraw after an agreed duration of years.

Meanwhile, you don’t have to feel guilty spending some of your bonus on yourself. During these challenging times, caring for our mental health has been put in the spotlight. Consider treating yourself as an investment in your emotional and mental well-being. Take a staycation, learn a new hobby, or sit down for a nice meal at a Michelin-Starred restaurant – do at least one thing that brings you joy!

Also Read: 7 Effective Ways to Retrain for a Post-Pandemic Career

Consider Tax Reliefs

If the extra income is something that you can live without using immediately, you may consider topping up your CPF.

While you may be stuck there until you make a withdrawal or claim, it does offer some benefits. It has attractive interest rates, can reduce your personal taxable income, and can boost your retirement payout when you are eligible to receive them.

You can also consider giving back to the community through donations. In February 2021, the government announced that the 250% tax deduction for qualifying donations will be valid until 31 December 2023. In this way, you are not only helping those in need but also lowering your taxable income.

Getting to spend your AWS on your terms is a reward you deserve for all the hard work you’ve done over the past year. However, we learned during the pandemic that the world is full of uncertainties.

Managing personal finances can go a long way in securing your future no matter what happens. If you haven’t quite figured out how much money you have on hand every month, the JobStreet Salary Calculator can help you find out. This way, you will be able to manage your regular monthly income better.

Setting aside some money for the future may be difficult for some people to do regularly. However, your AWS can help give us a good head start in personal financial planning.

Meanwhile, for personal career planning, JobStreet has you covered! From finding #JobsThatMatter to expert tips and career advice, you can count on us to be with you every step of the way.

Make sure to update your JobStreet Profile today!