Question: As quickly as my 13th month pay goes into one of my pockets, it goes out of the other. I want to experience using my 13th month pay more to buy things I want and not just to pay debt incurred for past expenses or current necessities. How can I have that?
Answer: The straight answer to your question is to improve your budgeting practices. Contrary to common perception, budgeting does not mean cutting back but more of having proper allocation of limited resources.
Since you are entitled to a 13th month pay, you are likely an employee in the private sector. Government employees do not receive 13th month pay but are given bonuses that can be the equivalent of such pay and can be split into two payments in a year. On the other hand, self-employed individuals are not mandated to give themselves a 13th month pay.
But regardless of whether you are a private or government employee, you were hired and promised compensation for your capacity to work and not your capacity to spend. Therefore, you cannot go around spending the equivalent of someone else’s higher compensation.
Now, I will be the first to tell you that living within your means is not an easy task. That is why you will need to follow the TWAHCD way of personal finance training. The acronym means “thoughts” turn into “words,” words turn into “action,” action turns into “habit,” habit develops “character” and character leads to your “destiny.”
Your thought is now focused on being able to enjoy your 13th month pay for enjoyment and not payment for past debts or current necessities. Your thought will turn into the need for budgeting. But all that budgeting will be for naught if you do not apply the budget repeatedly in your daily life. Doing so would make budget implementation your habit, which will go a long way in building a strong character in you to resist unnecessary spending and eventually lead you to your destiny of enjoying 100 percent of your 13th month pay. Yet, in TWAHCD, the more important parts are the action and habit.
To help you in making your action a habit, try mortifications—meaning, subdue your passions and appetites. And so that it does not feel as difficult as swimming upstream, try small mortifications first. In weightlifting, one starts with lighter weights and gradually increases the weight as he or she becomes more comfortable with the exercise. So should it be with your mortifications. Try not having sugar in your daily coffee, waking up 30 minutes earlier every day to avoid the morning rush hour, or smoking just one less cigarette a day if you wish to quit. No sooner than having done these small mortifications for a few weeks will you realize that they are not that difficult to perform.
Alternatively and for mortifications directly related to money, save the all-powerful yet underestimated loose change. Try saving a seemingly insignificant amount of P3.50 a day for five days a week and 52 weeks in a year. You will not miss that P3.50 because in your brain, it is hardly of any value. After a year, you would have saved P910. Is the amount significant? Why yes, because you would have needed P1.82 million kept for one year in a savings account that pays only 0.0625 percent per year in gross interest to earn a net of P910. And once you have become used to saving P3.50 a day, increase it slowly until you reach the level you targeted in your budget.
One of the best ways to start and keep saving is to do so with the intention of saving for others. It is not “mission impossible” but mission “I am possible.” Finding excuses not to save will be more difficult if the savings are meant for the brighter future of people you love. Also, don’t say that you are saving a percentage of your income because your brain will ironically see it as a loss (i.e. a loss in discretionary spending). Instead, tell your brain that you are living on a percentage of that income (i.e. wherein the unspent percentage is seen as a foregone gain).
Finally, do not just save your money. Once you have exceeded your target savings, invest the excess to turbo-charge the growth of your wealth. INQ
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