You are here: Home - Household Bills - News -

How to spend a payrise

0
Written by:
10/01/2019
For a number of lucky workers, January will bring a higher salary, but new research shows workers take just 43 days to adjust to a payrise.

Brits are likely spend their cash on more expensive alcoholic drinks and higher quality lunch options, according to new research from Direct Line Life Insurance, with the novelty wearing off after the first payslip.

In practice, with inflation currently running at around 2.3%, workers need a chunky pay increase to offset rises in their cost of living. Over half of workers saying that their additional income is absorbed by lifestyle upgrades in as little as three months.

The research also showed that one in five workers wouldn’t cope financially if their income reduced to its previous level.

However, many people have the right idea with their savings. Over two-thirds – 71% – chose to put their additional income into savings with almost a third (30%) doing so immediately.

The extra cash can cause problems with friends and family. More than a third of recipients cited said payrises had prompted jealousy, resentment and requests for loans. Just under 10% of people said they had migrated to a new group of friends having received a payrise.

Jane Morgan, business manager at Direct Line Life Insurance, commented: “After a pay rise it can be tempting to splurge out on something to treat yourself or ‘level up’ your lifestyle but it is often a good time to reflect on your financial position and consider the protection you have in place for your family.”

What to do with a payrise: the three golden rules:

Bulk up your emergency fund – financial advisers recommend holding three-months’ worth of expenses in cash in case of a rainy day

Top up your pension contributions – your company salary contributions should rise commensurately when you get a payrise, but it can be worth adding a little extra to boost your retirement fund

Don’t change your expenses – the novelty of a slightly better lunch quickly wears off. Keep your expenses the same and give yourself financial flexibility instead

 

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Coronavirus and your finances: what help can you get?

News and updates on everything to do with coronavirus and your personal finances.

Everything you need to know about being furloughed

If you’ve been ‘furloughed’ by your company, here’s what it means…

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

  • What are some things to be aware of in choosing property to fund your retirement? Find out from our pension special… https://t.co/VFuyUcRFp2
  • RT @Defaqto: With many nervous about taking an overseas trip, Brits are booking up holidays closer to home. But should you buy travel insur…
  • RT @Defaqto: With many nervous about taking an overseas trip, Brits are booking up holidays closer to home. But should you buy travel insur…

Read previous post:
How to avoid being ripped off when joining a gym

The start of a new year often brings promises of getting fit – but if you’re joining a gym, make...

Close