Money Illusionists

Pay rises and bonuses can be bad for you financially – and that’s official. New research from Prudential shows millions of British adults admit to running up debts by spending pay rises and bonuses before they have them.

The savings and investment giant has identified a new group of people dubbed “Money Illusionists” – so-called because they overspend ahead of pay increases and bonuses with the result they end up worse off.

And it’s a huge group – around 17% of British adults, (equivalent to 3.4 million people) – admit to spending money they are due as a pay rise or bonus before the funds have been paid into their accounts, with 9% admitting to having run up debt averaging £1,414 each (equivalent to £2.49 billion) over the past five years in anticipation of a payout from employers.

City high flyers might be celebrating after a bumper bonus round, but for many us it’s a life of “money illusion”. Prudential found that nearly one-in-ten Britons saying they have spent pay rises or bonuses only to find that the money they actually receive is 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.

On average, Britons say that a pay rise or bonus only lasts for two months before expenditure increase to match the new income. Less than a quarter (23%) of Britons say they have used bonuses or pay rises to pay off debts, despite the UK having unprecedented levels of consumer borrowing, with just 15% saving or investing the money and a mere 3% increasing their pension contributions.

In contrast, 19% spent the money on a holiday, 13% on home improvements, 12% of consumer electronics, 11% on jewellery and clothes and 8% on partying and nights out.

But despite 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.

Virgin bids for Air Jamaica's route to Britain

A lobby group in England is expressing concern as reports continue to swirl that Air Jamaica has sold its London slot and air space at Heathrow International Airport to Virgin Atlantic Airlines.

Facilitators for a Better Jamaica argues that Jamaica and Jamaicans in the UK are being short changed, by the sale of Air Jamaica's route to Britain. The group has questioned the inability of the authorities to communicate
with the Jamaican community in the Diaspora before making final decisions.

The organization said if the plans had been announced the Diaspora could have made a difference possibly in securing the same baggage allowance deals enjoyed by Jamaicans with Air Jamaica.

The lobby group argues that Jamaicans in the UK travelling to the island will have a problem with the baggage allowance as well as the possibility of increased fares if the deal becomes a reality.

Facilitators for a Better Jamaica is a Think Tank and lobbying group that specialises in being an effective voice with a mandate to speak up for Jamaica and Jamaicans' interest in the United Kingdom and internationally.

Working on a Smoke-Free Business

By Sarah Bultema