As the holy month of Ramadan draws to a close, millions of Indonesians are gearing up for Eid Al-Fitr, a time of celebration marked by family reunions, festive meals, and the much-anticipated annual holiday bonus known as Tunjangan Hari Raya (THR). For many employees across the archipelago, this bonus—equivalent to a month’s salary for those who have worked a full year—represents a financial lifeline. Yet, it also poses a dilemma: to spend on holiday joys or to save for an uncertain future.
In bustling Jakarta, the Tanah Abang textile market is already abuzz with shoppers preparing for the festivities. The seasonal mudik, a mass exodus where millions travel to their hometowns, adds to the financial pressures of the season. Amidst this, financial planners are urging caution, warning against the temptation to splurge and highlighting the importance of budgeting to secure long-term stability in a volatile economic climate. 
Personal Choices Amid Festive Pressures
For Ayu, a state-owned enterprise employee, the THR is a ticket to family reunions. Based in Kalimantan, she plans to travel to Bali for the holidays, a journey that will consume much of her bonus. When asked if she would save or invest any portion of her THR, Ayu told The Jakarta Post on 15 March, “Maybe not, because I’ve spared [some amount for savings] from my monthly income”. Her focus, like that of many Indonesians, is on the immediate joy of reconnecting with loved ones during Eid.
Dean, a newcomer to a private company in Jakarta with just five months on the job, faces a different reality. Not yet eligible for a full bonus, he plans to allocate his reduced THR to secondary needs. “I have yet to receive a full bonus, so I’m allocating my [reduced] THR for spending on secondary needs” he shared with The Jakarta Post on a recent Saturday. However, Dean is already looking ahead, considering investments in mutual funds or gold once he qualifies for the full bonus next year.
Meanwhile, 24-year-old Angga, also employed in Jakarta’s private sector, has adopted a more balanced approach. He intends to use 70 percent of his bonus for recreation and consumption, while setting aside 30 percent as emergency cash or for stock market investments. Despite a declining Indonesia Stock Exchange (IDX) Composite index, Angga remains committed to his plan. “I’ve made saving money a habit because I had implemented and tried to be financially literate from an early age, and [also] financially responsible” he explained to The Jakarta Post on Monday.
Financial Advisors Sound the Alarm
As the holiday spirit fuels spending, financial planners are raising concerns about the risks of overoptimism. Mike Rini, a seasoned financial advisor, notes that the THR offers a unique opportunity to cover holiday expenses without dipping into regular monthly income. However, she warns against unchecked expenditure. “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?” she told The Jakarta Post, reflecting a growing awareness among Indonesians of the need for financial prudence.
Rini advocates for strategic budgeting, emphasizing that emergency funds should ideally be built from monthly income but supplemented by bonuses like the THR during uncertain times. She also cautions against the allure of premature spending driven by the anticipation of the bonus, which can lead to debt traps for the unwary.
Andy Nugroho, another financial planner and educator, points out a silver lining this year: with Eid Al-Fitr falling near the turn of the month, many employees will receive their monthly paychecks and bonuses in close succession. This timing could deter premature spending, leaving more of the THR intact for savings or investment. Nugroho recommends allocating at least 10 percent of the bonus to such purposes, on top of a similar allocation from monthly income. “The rest could be used for covering holiday expenses” he advised The Jakarta Post on 14 March.
Investment Options and Risks
For those considering investments, both Rini and Nugroho suggest low to moderate-risk instruments. Money market funds, fixed income funds, precious metals like gold, and government bonds or Shariah securities are among the safer options for Indonesians looking to grow their savings. Rini stresses the importance of aligning investments with personal financial goals rather than chasing quick profits. “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 noted.
The recent downturn in the IDX Composite index serves as a reminder of the volatility of stock market investments, particularly for short-term goals. Rini advises against using funds needed within the next three years for high-risk investments, instead recommending government bonds for mid-term plans and stable instruments like money market funds for emergency reserves.
Debt as a Priority
For many Indonesians grappling with debt, the THR offers a chance to alleviate financial burdens. Both Nugroho and Rini agree that settling debts should take precedence over other spending or investment plans. Rini suggests a critical evaluation of debt types, distinguishing between essential obligations like mortgages and discretionary debts incurred for non-essential purchases such as new clothes. Her budgeting hierarchy places debt repayment and savings at the top, followed by asset acquisition, insurance, and finally, daily expenses.
Economic Context and Broader Implications
The annual disbursement of THR, mandated by Indonesian labour laws, is more than a personal financial boost—it’s a significant economic event. As millions of employees receive their bonuses, consumer spending surges, particularly in retail, travel, and hospitality sectors. This seasonal spike plays a crucial role in stimulating local economies, especially in urban hubs like Jakarta and tourist destinations like Bali. However, the flip side is the risk of inflation and increased household debt if spending is not managed responsibly.
Indonesia’s economy, while showing signs of recovery post-pandemic, remains vulnerable to global uncertainties, including fluctuating commodity prices and geopolitical tensions. The threat of layoffs, as highlighted by financial planners, underscores the precariousness of relying solely on regular income or bonuses for financial security. Government initiatives to support workers, such as recent discussions by the Manpower Ministry to extend THR eligibility to online ride-hailing drivers, reflect an awareness of these challenges, though implementation remains to be seen.
A Balancing Act for the Future
As Indonesians navigate the joys and pressures of Eid Al-Fitr, the THR serves as both a reward and a test of financial discipline. The stories of Ayu, Dean, and Angga reflect the diverse ways in which individuals approach this annual windfall, from prioritising family and travel to building emergency funds or dipping into investments. Financial advisors, meanwhile, continue to advocate for a cautious balance, urging citizens to look beyond the festive season.
In a nation where economic disparities remain stark, the decisions made around the THR could have lasting impacts on personal and communal stability. As the sounds of takbir echo through the streets and families gather to celebrate, the question lingers: will this year’s bonus be a fleeting joy or a stepping stone to a more secure tomorrow?
