How to spend bonus wisely?

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How to spend bonus wisely?
Most people receiving a monthly wage regularly regardless of how high or low their salary is would always wish for more revenues to be spent during the holidays. This is why the yearly bonus for employed individuals worldwide is the much awaited compensation for the whole year round. Initially, bonuses were bestowed by the employers to their employers for a job well done that contributed to the success of the business.

Regulated Benefit

The intention of sharing the organisation's profit to the members of their team is now protected by labour laws issued by governing bodies in many countries. Presidential Decree No. 851 also known as the 13th month pay or Christmas bonus is the regulation imposed in the Philippines to safeguard the welfare of the working class. This principle law in India is called the 1965 payment of bonus act.

Payment Calculations

Guidelines were also set in both countries for the payment of bonuses. Filipinos who have completed at least one year of service will be receiving a one month equivalent of their monthly wage. If the employment period falls short, then it is prorated based on the number of months served - whereas Indians earning beyond Rs. 10,000 monthly who have worked for at least 30 days or more in an accounting year, is entitled for 8.33% of the salary even if loses are declared by the establishment as the minimum extra pay. The maximum bonus is 20% of the employee's wage. Individuals earning Rs. 3500 to Rs. 10,000 monthly, their salaries will be assumed as Rs. 3500 for the sake of the bonus calculation.

Beneficial Spending

There are other provisions and requirements applicable depending on the work circumstances of an individual but more or less, one would know how much he or she is getting as an added compensation for the year. If you find yourself spending the whole amount of your bonus just in one occasion or upon receiving it, it's already a good sign that you need the following guidelines for self-discipline to be able to save some for the rainy days:

Do not rely on your bonus for all your wants - because it will never be enough.
Live according to your budget as allowed by your monthly wage and never augment your lifestyle based on the expected bonus.

Spare a big chunk or 50% of the bonus for emergency funds if you cannot allocate all.

By all means enjoy some part or around 20% of the bonus by spending for family affairs or entertainment.
Home repairs or improvements should be accommodated at 20% of the bonus - for continued comfort in your own dwelling.
It's not bad to allocate at least 10% for other people in the form of gifts, charity or advocacy.

You will have a great sense of achievement if you are able to see, feel and benefit from your bonus spending in a regular basis until the next bonus payment comes around. This is how you can truly be sensible with it rather than spend it all at once for things that are not lasting - and end up regretting when you are in dire need of money for health reasons or even to save the life of a loved one during an emergency situation. In short, use it as your safety net then you can live peacefully and comfortably!

InvestmentYogi

Read more about: bonus, investment
Story first published: Saturday, January 12, 2013, 9:58 [IST]
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