Use your 13th cheque wisely
Durban - December has come and so has Christmas and your 13th cheque.
This bonus is extra money given by employers to their employees during the festive season.
Depending on the company or employer, it can be just a little extra amount added to your salary or it can be a nice fat bonus serving as a reward for good service.
Don’t be shocked when the taxman swipes a lovely chunk of your bonus as well. But how?
Well, not only can he take more than 40% of your bonus when it’s added to your salary, but when you go shopping with the remainder, you will hand over a further 14% in VAT.
Irrespective of the amount, while you may be tempted to splurge, there are better things to do with your bonus, including:
* It would be best to budget your bonus and know where the money will go.
* Top up your pension fund to receive a further tax write-off.
* Save a minimum of 50% for a rainy day. The economy is not in the best state of affairs and job security remains a serious concern.
* Kick-start your investments. Save some at least by starting an emergency fund, which, over time, should be at least four to six times your monthly earnings.
* Prioritise your debt. We as a country have attained junk status. Debt is going to cost you more, so try to settle debt in order of interest rates charged.
* Buy a new set of tyres. You will be surprised how much fuel this saves over the year, while maintenance costs are reduced, and you remain safe.
* Pay your child’s annual school fees in advance. You’ll generally only end up paying for 10 months and not 12.
It is rewarding to share our blessings. Give back to your community, church, mosque or temple. Give gifts that would matter to others - this might be their only Christmas gift.
Pay your hospital plan or insurance policy upfront for a year at discounted rates. This will help increase your net monthly income.
Reward yourself: spend a small percentage on anything you please. After all, you’ve worked hard this year and deserve a bit of fun.
Make certain you have an equal balance and a budget that will make your bonus go the extra mile.
Sanjith Hanuman is a financial advisor.