To save or to spend? What to do with your thirteenth-month pay
It’s the most wonderful time of the year for employees!
If you've noticed a sudden influx of shiny new gadgets, new outfits, or freshly rebonded hair in the office, you know exactly why: the 13th Month Pay has arrived.
This annual bonus, mandated by Presidential Decree No. 851, gives you one-twelfth (1/12) of your basic annual salary. While treating yourself is what you deserve, there are other smarter ways to use that bonus beyond the initial shopping spree. We asked financial experts to impart their wisdom on how to make the most of it.
'Tis the season to let things go–like your debt
Before you spend a single peso of your bonus, take a look at the interest payments you'll owe come January. Financial advisor Sonny Boquecosa suggests getting debt out of the way, even if it might hurt.
“High‑interest debt hurts the most because it steals your future and drains your monthly cash flow. List your debts from the highest interest rate to the lowest, make at least the minimum on everything, and then use the rest of the money to tackle the top‑priority debt,” he said.
Wealth specialist and corporate lecturer Harlan Busto echoed this, saying there is value in prioritizing debts. Even if you can’t pay it all off, it’s a good place to start.
“[A]llocate a reasonably bigger portion for paying off debts, prioritizing those that earn interest. The more debts paid off, the better. Not only does it free you from interests, it also lessens your stress, increases your credit power (with banks), clears off your name, redeems your account, and liberates you from potential lawsuits. These are substantial rewards in themselves,” Busto said.
And for financial planner Alyssa Balaoing, having no debts is a reward in itself.
“Clearing your debts will help you start 2026 lighter and with less financial stress,” she said.
Choose what to build
After paying off your debts, nurturing your finances can go many ways. The key is to know your priorities. Business speaker Francis Kong simply lays it out: “Pay off debt first, then invest, and then keep in [the] bank.”
Following that, you should strategically protect your existing wealth. Many experts advise starting by getting yourself covered with a comprehensive life or health insurance plan.
“The goal isn’t to grow your money, but to protect what you’ve already earned. You wouldn’t want your savings wiped out by a medical emergency. Once you’ve got your basics covered, explore investment options like mutual funds, or even a retirement plan,” Balaoing explained
When it comes to deciding where to put that money after insurance, corporate lecturer and wealth specialist Harlan Busto reminds us that the plan needs to be personalized: “Put it where it can grow, depending on your risk profile.”
Finally, Balaoing adds an extra step of mindfulness when it comes to building emergency funds. “For employees, aim to save at least 3 to 6 months’ worth of living expenses. For freelancers, target 9 months to 1 year. Keep this in a high-yield savings account to make your money work a bit harder for you.”
Make rewards not just joyful, but also intentional
We’re all suckers for a treat here and there, but it’s even more rewarding when we’re more thoughtful about delaying gratification.
“Pick a reward that reinforces good money habits and brings lasting value, not just a quick hit of temptation,” advised Boquecosa. Perhaps you're eyeing a major appliance upgrade, considering that long-awaited dream vacation, or just hoping to check a Michelin restaurant off your bucket list.
While Kong said treating yourself should be "the least of [priorities]," he suggests going with a "tiny reward and celebration."
Balaoing assures that rewards aren’t always a hard no. “It’s totally fine to enjoy your bonus! Set aside a portion for a reward or an experience that brings you happiness, while keeping your financial goals intact.”
Once you’ve got a better grasp of your finances, there is room for some enjoyment. “With debts gone, you can allot more for investment. OR it's your turn to reward yourself more without being guilty,” says Busto.
