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“Spend Spend Spend” - Your Gratuity or Lump Sum Payment

At the end of your service you may be eligible to a lump sum payment or gratuity and this could be a large sum of money.  This is likely be the largest amount of money you have received in “one fell swoop” and although this may make your bank balance look incredibly healthy and therefore maybe encourage you to splash out on big purchases – please remember this is a one off payment – once it has gone – it has GONE!

Viv Nicholson became publicly known overnight within Great Britain in 1961when she received £152,319 (equivalent to more than £3 million in 2009 adjusted for inflation) and vowed to “Spend Spend Spend”, and she did!!  By 1976 she was bankrupt after poor investment decisions, failed business ventures and extravagance with no thought to risk and consequences.

It is widely known that Ex-forces are likely to receive a sizeable amount of money on leaving the military so beware of individuals and organisations who could approach you with “opportunities too good to miss”, or “get rich quick” schemes – the old adage of “if it seems too good to be true…..” needs to be considered carefully. 

Consider the following:

Debts on credits cards accrue more monthly interest than your savings account – so you may want to consider clearing debts first before adding to your savings.

Check with your Bank or Building Society if you are going to use the Lump Sum to pay off your mortgage that there are no early repayment fees incurred in doing so, these can be costly and mean an unnecessary expenditure.

Do you have a deposit for a mortgage if you are not already a home owner?  If you are likely to “Spend Spend Spend” then you may wish to consult an Independent Financial Advisor to seek ways of sensibly investing for the longer term in safe schemes through reputable organisations that perhaps limit your access to the capital invested.