Firstly, we have to address the question of “what is 13th Month pay, which is highly debatable in Singapore. That would provide us with a clearer perspective on the money that we will be receiving and how we should manage it. Though its always tempting to spend the lump sum on a vacation or a big ticket item, it would be wiser for some of us to do something else with it instead.

What is it called 13th month pay?

Undoubtedly, many would say that there are 4 weeks in a month. However we also know that there are usually more than 28 days (4 weeks X 7 days) in a month. In fact, there are 11 months of the year with more than 28 days in a month. That means that there are altogether 4 months of 30 days and 7 months of 31 days in a year. Since we are all paid the same amount of pay per month hence we are actually paid less during those 11 months. (exclude February)

Those unpaid days add up to a total of
4 X 2 days + 7 X 3 = 29 days

This explains why most of our pay schemes include a 13th month component payable on the 12th month. Knowing that our 13th month pay is actually not a “bonus”, the logical thing to do is to divide the amount by 11 months and add it to those months with 30 or 31 days.

But frankly speaking, how many of us will do that? 

What can we do with our 13th month pay?

1. Save, invest and clear your debts

This will probably sound weird but there is a logical reason why we should not splurge when we get our 13th month pay. The fact that we could live relatively well without it for the first 11 months, means that we can probably do the same even though we get extra income in December.

for instance,, we can actually deposit those monies in fixed deposit bank accounts, purchase sizeable portions of shares and bonds, or maybe even clear some of our debt. By putting the money away, we will be able to enjoy the benefits of lesser debt or higher growth in our wealth.

2. Learn a new skill or fund your hobbies

Spending on personal development is hardly a waste of money. If that skill helps in your career development, mental or physical wellness, then it is definitely worthwhile. I do believe that personal upkeep will lead to a healthier and balanced lifestyle, which will contribute to a better quality of life.

I recommend spending to learn a new skill which you will be using for fun or for your personal development because the return of investment will probably be more tangible as compared to spending on leisure activities.

3. Give the money away to someone who need it more

While we all have our personal views on charities, you can always choose to donate the money away to help someone or an organisation out in their time of need. The issue with modern capitalism is that it hardly promotes sharing as a wise thing to do. I.e., everything we do must be beneficial to ourselves otherwise it will labelled as a waste or an unwise decision. No doubt, most of us will want to maximise our resources, but lets just consider this option especially when someone or some charities require some financial support.

Closing thoughts

Lets recap that your 13th month pay is not really a bonus at all. We have explored several possible uses for our additional income for the month of December and lets act on it wisely together. December is around the corner! Plan ahead so that you can be better prepared when the money comes. Cheers and I would love to hear your plans in the coming month.