Debts can worsen with a pay rise
According to new research from Prudential, British adults who are expecting pay rises and bonuses are running up debt before they even receive the money in their bank accounts. More than 3.4 million get into debt spending before they have the cash.
A new group identified by Prudential, the ‘Money Illusionists’ are a growing group in British working adults. Around 17% admit to spending money they are due and 9% admit to running up debts averaging £1,414 each. This is equivalent to a total of £2.49 billion over the past five years.
After a bumper bonus round for many city high flyers, the rest of Britain looks on with nothing but a life of ‘money illusion’. Prudential offers a warning for many Britons, especially as nearly one in ten found after spending pay rises or bonuses, that the money that they received was less than they anticipated.
Prudential’s Business Insurance Director, Angus Maciver said: “Pay rises and bonuses ought to be the answer to most people’s financial prayers but in many cases they appear to be putting people further into debt. 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.
“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 and we strongly encourage consumers to take financial advice and ensure that they have sufficient protection to enable them to weather any loss of income, as well as enjoying any increase.”
Due to Britons having to match their new income as a result of a pay rise or bonus, money lasts for just two months on average for many before expenditure increases. 30% said money lasts them just a month while 18% say just two weeks. In spite of these pay-rise and bonus-fuelled spending sprees, less than half (48%) of Britons say they have savings or insurance to tide them over in the event of job loss.
Even though the UK has unprecedented levels of consumer borrowing, less than a quarter of Britons say they have used bonuses or pay rises to pay off debts. A mere 3% used their pay rise or bonus to increase pension contributions and 15% invested or saved their money.
Areas where Britons were likely to spend the money included 19% on a holiday, 13% on home improvements, 12% on electronics, 11% on jewellery and clothes and 8% on partying and nights out.
Homeowners who are finding that, after a recent bonus or pay rise, that their credit and store card bills are mounting up could look at a debt consolidation loan as one of many options to consolidate debt. A debt consolidation loan could assist homeowners by gathering multiple monthly store and credit card payments into one straightforward payment made payable on the same day every month. Worrying about when payments will be made and how could be a thing of the past with a secured loan, finances could be organised leaving homeowners to plan their finances ahead with confidence. Homeowners should remember that repaying over a longer term will increase overall interest charges. A debt consolidation loan is made payable over a term to suit the borrower from 5 to 25 years.
Nemo´s typical rate is 8.9% APR variable. A NEMO LOAN IS SECURED ON YOUR HOME. THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT. A new group identified by Prudential, the ‘Money Illusionists’ are a growing group in British working adults. Around 17% admit to spending money they are due and 9% admit to running up debts averaging £1,414 each. This is equivalent to a total of £2.49 billion over the past five years.
After a bumper bonus round for many city high flyers, the rest of Britain looks on with nothing but a life of ‘money illusion’. Prudential offers a warning for many Britons, especially as nearly one in ten found after spending pay rises or bonuses, that the money that they received was less than they anticipated.
Prudential’s Business Insurance Director, Angus Maciver said: “Pay rises and bonuses ought to be the answer to most people’s financial prayers but in many cases they appear to be putting people further into debt. 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.
“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 and we strongly encourage consumers to take financial advice and ensure that they have sufficient protection to enable them to weather any loss of income, as well as enjoying any increase.”
Due to Britons having to match their new income as a result of a pay rise or bonus, money lasts for just two months on average for many before expenditure increases. 30% said money lasts them just a month while 18% say just two weeks. In spite of these pay-rise and bonus-fuelled spending sprees, less than half (48%) of Britons say they have savings or insurance to tide them over in the event of job loss.
Even though the UK has unprecedented levels of consumer borrowing, less than a quarter of Britons say they have used bonuses or pay rises to pay off debts. A mere 3% used their pay rise or bonus to increase pension contributions and 15% invested or saved their money.
Areas where Britons were likely to spend the money included 19% on a holiday, 13% on home improvements, 12% on electronics, 11% on jewellery and clothes and 8% on partying and nights out.
Homeowners who are finding that, after a recent bonus or pay rise, that their credit and store card bills are mounting up could look at a debt consolidation loan as one of many options to consolidate debt. A debt consolidation loan could assist homeowners by gathering multiple monthly store and credit card payments into one straightforward payment made payable on the same day every month. Worrying about when payments will be made and how could be a thing of the past with a secured loan, finances could be organised leaving homeowners to plan their finances ahead with confidence. Homeowners should remember that repaying over a longer term will increase overall interest charges. A debt consolidation loan is made payable over a term to suit the borrower from 5 to 25 years.
