With the always highly anticipated Christmas bonus in the air, along with the famed 'good cheer' of the season, many persons will be anticipating extra savings. Of course, many times the dreams of more cash in the piggy or commercial bank is only that - a dream, as the extra money goes into unplanned expenditure.

This does not apply only to a bonus, however, but also any more regular increase in income.

As student social worker at the University of the West Indies (UWI), Carolyn, explains, "as people get more income they tend to want a supposedly better lifestyle, which always means that they will be spending more money."

Increased expectations

"These increased expectations often mean that as people get more money they do not save any more. In fact, they may end up saving less," she said, noting that with the new, higher, stable income they may go into long-term expenditure such as a car loan.

It does not have to be this way, of course, and accountant Marie, who is pursuing the ACCA examinations, says if people would simply set their expectations reasonably they would be able to turn the extra income into long-term savings.

"Ideally, the lifestyle should not change at all," Marie said. "After all, nothing has changed to warrant the extra spending, unless the person was in very bad circumstances that need addressing," Marie said. Still "we are human and we always want better, but the key thing is to make sure that some of the money is put away and certainly that you do not enter into long-term debt that effectively spends the money before you get it".

She recommends that at least 50 per cent of any increased income, a lump sum or over the long term, should be dedicated towards savings. "The fact is that usually the person was surviving on the income they were getting before, so the actual need to spend more is not that is much. What they want, however is another matter and that is what has to be controlled," Marie said.

As Carolyn puts it, "psychologically we are programmed to be consumers and the greatest thing advertisers make is desire, which eventually appears to be a need. It is a matter of self-control".

And she also warned of another kind of control. "Many times, people are pressured into higher expenditure by people around them, who actually ridicule them for conserving. It would help a lot if this kind of criticism was avoided or simply dismissed," Carolyn said.