MANILA, Philippines – A financial expert said the holiday season is the best time to build a solid financial foundation for employees because of the 13th month pay and other bonuses they receive.
Dr. Jamie Lorenzo, executive director of International Marketing Group, said that to have financial “peace of mind,” you must first build a financial foundation.
“It’s just like building a house. Before you can build the second floor, you must build the first floor first, pero syempre before that, you must build the foundation,” he told ANC’s “On The Money.”
Lorenzo said protection is the first step in building the foundation, which means investing in life insurance and health care.
Once you are protected, Lorenzo said the next step is to pay off all debts and set aside 3 to 6 months’ worth of emergency funds.
He said bonuses by year-end should be split to pay off debt and for savings.
If you plan on splurging during the holidays, Lorenzo suggested increasing income and cutting expenses before the season even starts, so that additional cash from bonuses will not be touched.
He shared that he and his wife follow a “holiday formula” on how to use their bonuses.
“October palang, na-budget na namin ‘yung for the holidays. So once we receive our bonus or any lump sum that we get in December, 10 percent I give to tithing, 10 percent to calamity victims, and 80 percent to investments,” he said.
Lorenzo said that while some save their bonuses, most have the habit of spending it all. Others, he added, manage to spend their bonuses before they even receive it through credit purchases.
Lorenzo recognizes that most Filipinos will rather spend all their extra money to buy gifts for their loved ones, but he said there should always be a balance in spending and saving.
"It's the thought that counts. You don't always have to buy expensive gifts to your loved ones...Your real friends will understand and they will even encourage you to save for your future," he said.