People who are made redundant and receive a financial package should make sure they do not whittle the money away, it has been warned.

Some may see the money as a windfall, revealed ATA Selection, although making sound financial decisions is highly important.

Andrew Hardaker, managing director of ATA Selection, said: "Some payoffs can run into six figures and it is easy to be lulled into a false sense of security and think the money will last forever: it won’t, particularly if you end up struggling to get back into employment."

He also warned that packages should be perceived as compensation for a job loss, rather than funding for pursuing lifelong dreams.

For some people, receiving redundancy pay will be the single biggest sum of money they will ever have, although it should be treated as a long-term investment, Mr Hardaker added.

It was revealed last month that the number of unemployed people in the UK had increased to 2.22 million.

During the first quarter of the year, the unemployment rate stood at 7.1 per cent, the figures from the Office for National Statistics showed.