Pay rises 'can lead to more debt'
Published On 18 May 2007
Getting a pay rise at work can actually result in greater levels of debt, a new study has found.According to Prudential, 3.4 million people in the UK admit that they have ended up in debt after getting a pay rise. In total, the company estimates that these "money illusionists" have amassed 2.49 billion of debts in the last five years.
Around 17 per cent of Brits said that have spent money from pay rises or bonuses before the money has been put into their account. Just fewer than one in ten (nine per cent) people said that they had got into debt as a result of this pre-emptive spending.
"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," said Prudential's business insurance director, Angus Maciver.
"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," Mr Maciver added.
Only 15 per cent of people said they used any of their pay rises or bonuses to make savings or investments.
