March 24, 2025
JAKARTA – As Idul Fitri approaches, employees nationwide look forward to their annual holiday bonus (THR). To some, it’s a well-deserved reward to be used for instant gratification, but financial planners recommend keeping at least some for a rainy day.
State-owned enterprise employee Ayu is undecided on whether to spare some of her THR for saving or investing, as her immediate priority is to travel home for the holidays, like millions of others joining the seasonal mudik (exodus) that marks the end of Ramadan.
Would she save or invest her THR? “Maybe not, because I’ve spared [some amount for savings] from my monthly income,” she told The Jakarta Post on March 15, adding that she had plans for traveling from Kalimantan to Bali once she received the THR.
Dean, who only started his job at a private company in Jakarta about five months ago, said he had planned to use the bonus for secondary needs.
“I have yet to receive a full bonus, so I’m allocating my [reduced] THR for spending on secondary needs,” he told the Post on Saturday.
Employees are eligible for THR equivalent to one month’s salary once they have worked in a company for a full year.
Dean is considering investing half of the bonus in mutual funds or gold, once he gets the full THR.
Meanwhile, 24-year-old Angga, who works for a private company in Jakarta, plans to use 70 percent of the bonus for recreational purposes and consumption, while stashing the other 30 percent away, as emergency cash or to invest in the stock market.
Speaking to the Post on Monday, he acknowledged that the Indonesia Stock Exchange (IDX) Composite index had been declining but held fast to his stock market investment plan.
Angga said he had made saving money a habit because he had “implemented and tried to be financially literate from an early age, and [also] financially responsible”.
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Advisors warn that the holiday bonus can encourage overspending and suggest that people plan ahead with their budgeting by making room for saving.
Financial planner Mike Rini noted that the THR could help cover spending needs beyond regular monthly expenses, including Idul Fitri holiday travel, so that people would not need to rely on their monthly income “allocated for monthly expenses”.
But she stressed that setting priorities in budgeting was crucial to prevent uncontrolled spending, as the anticipation of the THR often sparked “overoptimism” that could tempt people to splurge in advance, potentially trapping them in debt.
“With economic uncertainty and many layoffs, [financial hardship] can happen to anyone, so why don’t we try to enhance our financial security by increasing our emergency fund?” Mike said, while acknowledging that many people nowadays shared that prudent mindset.
While emergency funds should be built up in a regular fashion through allocations from people’s monthly income, she explained that concerns about the risk of layoffs and financial crises should push people to earmark additional funds, such as from the THR.
Save more with holiday bonus
Financial planner and educator Andy Nugroho pointed out that, with Idul Fitri falling near the turn of the month this year, the disbursement of monthly pay checks and bonuses would lie close together for many.
This means that many employees would find they have most of their THR still available come Idul Fitri, as they would not have had much time to spend it prematurely ahead of the holiday period, which should make it easier for them to hold onto some of the extra income.
He suggested allocating 10 percent of the bonus for savings and investment, in addition to the 10 percent that should go toward the same purpose from each monthly pay check.
“The rest could be used for covering holiday expenses,” he said to the Post on March 14.
For those considering investing the money, Andi recommended instruments of low or moderate risk, such as money market funds or fixed income funds. Alternatives included precious metals and government bonds, or government Shariah securities.
Similarly, financial planner Mike also suggested allocating 10 percent of the bonus for saving or investing.
“When we talk about investment, always remember our goal is to make profits and diversify our assets, but any investment has its own risks,” she said, noting that the choice of instruments would depend on personal circumstances. “It’s not about which one could make more profit, but which one is more aligned with our financial goals”.
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Investing in mutual funds or the stock market should be for long-term goals, she explained, pointing to the IDX Composite index’s drop since the beginning of the year as evidence that such investment was not suitable for short timeframes.
“If the funds are set to be used in the next three years, plan for mid-term investment,” she said, going on to recommend government bonds as a safe asset for this type of investment and suggesting even more stable instruments, such as money market funds, for people’s emergency funds.
Relieving financial burden
For anyone in debt, reducing that financial burden should be the foremost priority when it comes to using the THR, Andi noted.
Mike similarly emphasized the need to settle debts first and suggested evaluating whether the debt was based on needs or wants, illustrating the point by contrasting debt for buying a haul of new clothes with a mortgage.
She suggested levels of priority in budgeting, from paying off debts and adding to savings to buying assets and paying for insurance. “Lastly, use the rest of the money for daily expenses,” she noted.