Pay rises make us worse off
May 17, 2007 by admin
Filed under News, News-Banking
That pay rise you have been pining for may make you worse off financially.
It may sound silly but, according to Prudential, many of us find that we actually suffer financially as a result of a pay rise or bonus.
The reason, says the financial services firm, is that many of us throw our good banking guides out of the window when we get a rise and start spending the money before we even have it.
Around 17 per cent of Britons are said to behave in this way, falling into a category dubbed by Prudential as ‘Money Illusionists’.
This is equivalent to 3.4 million people who spend their entire bonus or pay rise before they have received it, while nine per cent have even managed to get themselves into debt as a result.
“A pay rise or a bonus ought to be the trigger to get debt under control but too many of us simply see it as an excuse to spend more,” commented Angus Maciver, business insurance director at Prudential.
“It is particularly worrying that so many people appear focused on gaining pleasure now, spending increases and windfalls rather than saving.
“As Britain’s consumer debt levels continue to grow it is vital that people make provision for good times and bad,” he added.
Most people (19 per cent) admit to spending their pay rise or bonus on a holiday, while 13 per cent choose home improvements and 12 per cent on electronic gadgets.
On the other hand, only 23 per cent use the money to pay of debts and 15 per cent choose to save it.
