The research highlights how quickly Brits acclimatise to their new income following a pay rise, with over half of workers saying that their additional income is absorbed by lifestyle upgrades in as little as three months.
The first items that Brits splash the cash on following a pay rise are more expensive alcoholic drinks and switching to premium lunchtime meals, such as changing from Greggs to Pret A Manger. However, people who were more sensible with their new-found wealth, chose to put their additional income into savings (71 per cent) with almost a third (30 per cent) doing so immediately.
Having received a pay rise, millions of people would struggle to return to their previous income level, with almost one in five (19 per cent) saying that they wouldn’t be able to cope financially if their income level was reduced to the level it was before their pay rise. A further 13 per cent don’t know if they would be able to cope, or not.
While everyone welcomes a pay rise, the research highlighted it can cause problems with friends and family, as more than a third (36 per cent) of recipients cited issues such as; jealousy, resentment and requests for loans from their nearest and dearest. One in seven (14 per cent) Brits who received a pay rise didn’t tell friends or family because they felt it was none of their business.
Jane Morgan, Business Manager at Direct Line Life Insurance, commented: “Receiving a pay rise is one of life’s little perks; not only making us feel valued at work but also providing us with some very welcome additional income. While we all dream about what we would do with a bit of extra cash, when the time does come, it’s important to think carefully about where this additional income could be used best.
“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.”
“Direct Line Life Insurance and critical illness cover offers an affordable way for families to help look after loved ones financially if the worst does happen, paying out a lump sum, to help deal with every day money concerns such as; household bills, childcare costs and mortgage payments.”
In addition to changing spending habits, the analysis showed that a salary increase can have an impact on social lives. This phenomenon appears to affect men more than women, with almost one in ten men (nine per cent) saying that they migrated to a new group of friends on a more similar income bracket having received a pay rise, compared to just three per cent of women. One in twelve men (eight per cent) also said family and friends expected them to pay more on social occasions, versus just three per cent of women who had a similar experience.
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