We know from previous research that your 30s are your savings peak, with savers putting away nearly 60% of their disposable income each month.

However, the amount we save isn’t an easy thing to talk about for everyone. Ask your friends and family about their savings habits and you’re sure to get a different answer from each one of them.

We decided to dive in and ask those people who recently received a pay rise or bonus how the uplift in salary affected the way they thought about savings, and what they spent theirs on*.

30% of us received a bonus in the last year and 51% received a pay rise

That’s quite a few of us who need to decide whether we’d benefit more by improving our immediate lifestyle or by looking after our long-term future through saving our extra cash.

So how are we using our increased income? Here’s what we found:

70% of people don’t save their pay rise or bonus. Here’s how they spend it

Meaning just 30% of us decide to save our extra cash.

Let’s face it - it’s not often that we have a cash increase to consider, so we were intrigued to find out what most of the 70% of non-savers amongst us do with our windfall.

Here’s how we spend it:

• Holidays: trips away are amongst the most popular ways to spend the extra cash. 16% of people who received a bonus and 9% who had a pay rise used the extra money to contribute towards holidays, including journeys overseas.
• Clearing debts: not all of us decide to push the boat out, with 13% of people who received a bonus and 12% of those who gained a pay rise using the extra money to improve their finances by clearing debts.
• Increased lifestyle spending: 11% of us use a pay rise and 9% of us use a bonus to upgrade our day-to-day lives, perhaps by using it to treat ourselves to an expensive meal out, or upgrading a family trip by visiting the funfair instead of the park.
• Special occasions: A few of us dedicate our bonus or pay rise to pay for special occasions, with 4% relying on our bonus and 2% using our pay rise to fund things like anniversaries and special birthdays.

30% of people save their bonus or pay rise

Not everybody decides to hit the shops to spend their bonus cash, with some of us choosing to place our extra money into a mixture of different types of savings accounts instead.

Just 20% save all of their extra income, whilst 10% explained that they managed to keep at least some of their recent raise to give their savings a welcome boost.

We found that 76% of those savers did so by depositing their bonus or pay rise straight away.

By deciding to place funds into a savings account immediately, they’re removing the temptation to spend and will start earning interest on savings straight away.

44% of people don’t feel the benefit of a pay rise

It’s easily done - you’ve got more money in your pocket, making your money easier to spend.

In fact, almost half of the people who decided against saving their pay increase say they didn’t notice an immediate rise in their available budget.

The post-payout blues are soon to kick-in too, with 73% of us explaining that we don’t feel any better off as soon as three months after an increase.

In fact, only 1 in 6 of us say we still feel flush 1 year on, despite not placing the extra money into a savings account.

What people need to top-up their savings

We asked how much of a cash lift it would take for the 70% of us who don’t save our income-increase to make saving their bonus or pay rise their top priority.

• Pay rise: workers declared that they’d need a pay rise of around £4,000 on average, before they’d consider increasing the amount they put away in savings each month.
• Bonus: it’ll take a pay out of almost £3,500 for us to consider not spending our bonus payments - instead placing them safely into savings.

Saving smaller amounts of money can sometimes seem like it’s not worthwhile. But even putting a little of your cash away regularly can soon build up, and it’s truly satisfying to see your savings grow.

^{*Opinium conducted research among 2,002 adults living in the UK on behalf of Charter Savings Bank between 21st – 23rd May 2019}