Bonuses set to boost savings

A large number of Britons who receive bonuses are resisting the urge to spend their extra money, according to a new report.



Research from Birmingham Midshires revealed that 39 per cent of bonus recipients saved all or most of the bonus payments they received in the last 12 months and an additional nine per cent used the money to reduce their mortgage.

Around six per cent said that they put their bonus into other types of investments.

However, there were those that did not manage to save their bonus cash, with 12 per cent of Britons spending it on a holiday and a further 11 per cent splashing out on electronic gadgets such as plasma TVs.

UK workers took home more than £24 billion in bonuses over the past year, with the average bonus adding up to £1,758.

Director of savings operations for Birmingham Midshires Jason Robinson commented: "You don't need a huge amount to save or invest so lucky bonus recipients should try to find a healthy balance between rewarding themselves for a year of hard work and squirreling their cash away."

A study from Barclays Wealth revealed that January was the month in which workers were most likely to receive bonuses, with one-third of them being paid out then.

Bonuses 'an excuse to spend not save'

Millions of Britons have admitted getting into debt as a result of pay rises and bonuses, new research shows.

A survey from Prudential found that 17 per cent of adults have spent money that they are due as a pay rise or bonus before it has been paid into their account and that after paying off debts, they are most likely to spend it on holidays or home improvements.

The firm found that on average, a pay rise or bonus lasts Britons around two months before expenditure rises to match the new income, with only 15 per cent saving or investing the money and three per cent increasing their pension contributions.

Prudential's business insurance director Angus Maciver said that while pay rises and bonuses should be the answer to people's financial prayers, in many cases they are used as an excuse to spend more.

He commented: "It is particularly worrying that so many people appear focused on gaining 'pleasure now', spending increases and windfalls rather than saving."

A recent poll from Nationwide revealed that when it comes to choosing savings products, 77 per cent of Britons look for a high interest rate that continues after the initial period and 54 per cent value the ability to withdraw savings without notice.

Insurances Limited “We are expecting climbing interest rates to have impact on this type of spending, many consumers do spend what they do not have and rely on what is to come and not what they have.”

Tips For Saving Money

As most people are feeling the pinch of the credit crunch some ways of saving money include: Budget well and put money into a separate account for events such as Christmas. Unplug all electrical items and do not leave them on standby.

Plan a food menu weekly and stick to the list. Do not shop when hungry, as it is a well-known fact shoppers spend more if they are hungry. Use the ISA allowance every year, as this will allow tax-free savings. Check bank statements to make sure that cancelled direct debits are not still are being paid.

Lights should be switched off in rooms when not in use and it is cheaper to hang washing on the line rather than using a tumble drier.

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