To think most people my age (32) are making huge financial mistakes?

I used the 5 year returns from the Sharia NEST fund (NOT MY RECOMMENDATION!). You can do the math using this site.

https://www.calculator.net/investment-calculator.html?ctype=endamount&ctargetamountv=1%2C000%2C000&cstartingprinciplev=0&cyearsv=10&cinterestratev=16.7&ccompound=monthly&ccontributeamountv=375&cadditionat1=end&ciadditionat1=monthly&printit=0&x=Calculate#calresult

(Or £12M at age 57 if starting at age 20!)

If you can get up at 5am and leave the house to get two buses to work then that’s a viable choice for you while you save for a car.

However, if you’re a single parent and you have kids to get to school at 8am, and no way to get them there and get to your job via public transport because you can’t get your kids up at 5am and the bus route to work doesn’t go past school, then what choice do you have?

Your parents could choose to make sacrifices because they had each other. Your dad could choose to work away to keep you afloat because he had your mum to look after you. If your dad were a single father, that choice wouldn’t have been there.

Yes we all make choices but you’re not understanding the essential point here that circumstances dictate our choices. You choosing to save for a car and take public transport when you were young and single is not the same choice someone who is solely responsible for childcare and lives in an area with poor public transport can make.

I’m not denying the reality that some people do make genuinely shit choices within their circumstances and they have to take responsibility for those. But some people get handed really shit circumstances - ill health, the death or abandonment of a partner, children with severe disabilities or other needs, etc - that severely limit their choices. In some circumstances, there are literally no choices.

@XVGN but many don't have £300 spare at 20 or an employee who matches. Plus even if you don't spend £300 on a car many still need a car or public transport which doesn't come cheap.

I wasn't very clear. Apologies. I wasn't suggesting you could retire at 30 on a fund of £115K. What I meant was that you could break the back of building a decent retirement fund for, say, age 57. If you could save £115K in 10 years, then at 57 you could have millions if you kept contributing. You COULD retire early on that! And all for the price of a new car PCP.

Add in employer contributions on top and you'll be very financially secure. But you need to understand about starting early, compound interest, asset diversification and rebalancing. And avoiding ESG funds!

That's a very simplistic view
Many people who " need" a car simply don't want to get public transport or cycle.
They move to the back of beyond and then moan they need a car
They have 3 kids before buying a house and then moan they can't afford one

Everyone has choices and some people make shit ones.

But everyone does have choices within their circumstances. The options are different but it's still a choice between, for example, but a car or get the bus.

I made a choice to get two buses from my rented accommodation to my job, rather than buy a car on finance, because I wanted to save that money each month, own my old, slightly battered car outright and then continue being able to save once I had it. I could have gone with finance but then I have monthly payments to keep up and couldn't save.

I'm well aware of poor circumstances. I remember my parents surviving on one small income when I was younger. My dad worked all hours, often away, just to keep us afloat. I remember eating corned beef stew for a whole week, regularly, because it was cheap and easy to make from basically nothing. I remember being cuddled under one blanket to keep warm because we couldn't afford to put the heating on.

They made choices to go without things to keep us afloat and eventually get comfortable. They made choices to not pay for everything for me once they were comfortable to teach me the ability to also make those choices for myself. Their example is why I make my choices the way I do. I remember how hard it was as kid in those circumstances and I don't want that for my daughter, so I make, what for me are the right choices.

Everyone has a choice. The options might be different but there's always a choice.

I agree wholeheartedly having been there. The 1980s and first part of the 90s were particularly hard for us and we were both earning, had quite reasonable jobs. We certainly never saved anything, couldn't. However it did improve and I am content now as a pensioner. I know, everything comes too late :-). What I can do now is lend a helping hand here and there, discreetly. I've no regrets.

I'm very impressed with young people that have their financial shit together. 32 was 10 years ago for us (DH and I). I was not sensible with spending. We were child free, student loan free, renting and I was earning 75k/yr. I spent more than I shd have in chanel in my late 20s/early 30s. No debts, never had a credit card. Credit score is amazing and always has been. I think making poor financial decisions happens when you are trying to figure your stuff out. I spent in a way then I would never consider spending now with DC and a mortgaged house. I will not beat myself up about it. You live and you learn.

@IpsyUpsyDaisyDoos

Not everyone does have choices.

If you’re on a low income with no savings and you need your car to get to work, and your car packs in and you need a new one now otherwise you’re going to lose your job, what choice do you have other than finance?

I don’t think you are appreciating how challenging some people’s lives are and how difficult it is to avoid debt in our current economic climate. For some people it’s impossible to save anything because their wages only just cover their living costs. Then if the washing machine breaks or the car doesn’t pass its MOT or your child
comes home from school having ripped
the sleeve off their blazer and you’ve got to buy them a new one, you’re forced to put it on a credit card, which means you’re always chasing your tail and never able to get ahead.

You talk about choices, but people who talk about choices speak from a position of privilege. Our choices are limited by our circumstances. We don’t choose our circumstances.

Because my work pension is linked to state retirement age which keeps going up. Two of my grandparents didn't reach 60, never mind 70.

There were very few occupational pension schemes when today’s pensioners started work in the 70s. And lots weren’t open to women. I remember my dad saying it was part of the appeal of going to work for Barclays when he left the services in 1967. The world hasn’t always been the way it is now and it’s naive to judge people on the assumption that it was.

My DH didn't go to uni, I met him while I was working around it and he was working in a temp position because he'd been made redundant twice in six months.

I didn't "bag a man that earned well", I met someone who had as little as I did and similar values and we made decisions together.

If you'd read any of my posts as well, I didn't say I had "good judgement", I said people had choices to take out finance or not and that provided they could afford the repayments and what they were doing made them happy, then great. I talked about how people have different priorities and that's fine too.

Car ownership is a privilege, you are correct, but what car you get is still a choice. For my first car, I saved up, bought a second hand, tiny, 1L car for £2,000 when I was 21 because that's how long it took me to save as I was also paying for uni, given that I had no grants and my loans covered tuition and some essential books. I got the bus or walked til then. My friend had inheritance and spent 10k on a brand new, tiny, 1L car when she was 18. A different friend did not save, bought a brand new 30k car on finance when she was 18 and then couldn't afford to either save for a deposit or pay rent and stayed at home. All three of us were very happy with our lives, despite them being different.

I'm not making judgements, I'm just pointing out that everyone has a choice as to whether they take out finance for things like cars, they have a choice whether they rent a 1 bed flat or a 3 bed detached. They have a choice to max out their mortgage (which we did) to buy in a certain area or a certain size or buy more cheaply. They can choose to buy second hand furniture and appliances or take finance for top of the range.

I'm not for one second saying everyone can afford a mortgage or to rent a bigger house. What I'm saying is everyone makes choices within their own financial situation. And that's fine.

You've decided I'm being judgy, I'm not, I'm just pointing out that when people say "some have no choice but to take finance", actually they do.

I think money literacy has been lacking for all generations - look at todays pensioners worrying about the benefits being means tested - they've had decades, and good decades to put by pensions and have not worried.

Every generation has financially savvy people and those who are like kids in a sweet shop.

My Great-Granny managed to get such a highly paid job during WW1 she bought a plot of land and built a house on it, all registered in her name, no man required.

My sister, was 18 in late 80's, went crazy on the credit cards and was up to her neck in debt by her 19th bday with nothing to show for it. Still paying it off until her 30's. Ruined her life financially as she had a decent income but due to her credit score being screwed she was never able to buy a house and stuck with renting from the council in a pretty run down area.

My parents bought their current home for 60k in the mid 80s, it was their 2nd home though so had some equity. I think average prices then were around 50k

I’m early 50s. Lots of people my age are swimming in debt - overstretched mortgages, lease cars, holidays on credit cards and then the student loan top up money to fund. Equally lots of people have either zero debt or just a manageable mortgage. There are lots of people my age and older with almost zero pension savings and retirement less than 15 years away. Some people are savers and some are spenders. Some people get as much pleasure from things that other people get from having the cash in the bank. I have a colleague who is 72 and still working, albeit part time, to fund her shopping habit. Her thing is homewares - she redecorates more often than I get my hair cut and every time it’s all new furniture and light fittings etc. she buys a new set of garden furniture every year. It’s not as straightforward as the young are financially illiterate feckless consumers but every generation of young people have been brought up by one who has normalised having more/newer/better “stuff” than the one before (and a bigger house to fit it in). We have also flipped from the post war generation to an economy where essentials are expensive and luxuries are relatively cheap - what’s the point in telling that friend you can’t meet her for that £12 breakfast when your rent is £1600? Why deny yourself Netflix and an iPad when childcare costs 3 iPads a month? You can accumulate savings over time by not spending on anything other than essentials but for too many people it’s still not going to mean they can own a house so why not enjoy yourself?

Wow, I don’t know how she managed that. My two bed terrace in a commuter town was £69k in 1991.

Mine does. But we have a generous scheme.

I think the poster having re-read meant at retirement not actually it being worth that when they were 30.

is it normal for an employer to contribute that?

If the employer pays double then yes it’s easily doable. Otherwise I’m less convinced. Maybe at retirement 30 years later - and that’s the thing, the earlier you save the better off you are.

AGREE,
taking our answers and writing an article to be published somewhere!

I think that for some people, life is just really fucking hard and the instant gratification of booking a holiday or getting/doing something nice trumps squirrelling away what little they have spare to save for a house that you don’t feel you’ll ever be able to get a deposit for.

For my family, my husband works outrageous hours (like truly appalling, he’s had days where the break between his 14+ hour shifts has been so short he’s not even had chance to get home in between) and on a good month he will earn enough to cover our bills and not much else. On months with no overtime it’s not enough for our bills and we don’t live extravagantly at ALL. My heart breaks for him with how he works but the industry he is part of doesn’t value the sheer degree to which it dominates your life and the hours the staff put in.

We have a young child and if I didn’t work a day or two a week when my parents are able to help with childcare (nurseries are so unaffordable around here) we would be living in our overdraft some months.

For us, squirrelling the little we have to save for a house seems pointless - we would rather book a trip so we all have something to look forward to/motivate us through hard work. Our car broke and we couldn’t afford to just replace it, we’ve been saving the last few months but we are managing without and while it probably seems exceptionally financially irresponsible, a little holiday is winning in our car vs. week away money debate.

A lot of people I know are the same. Everything costs so much and people just want to feel like they’re not working for nothing and actually living, so make decisions that are maybe a bit stupid from the outside. It makes you happy to get clothes that make you feel nice so people stick it on Klarna, or Buy Now Pay Later. Or book a holiday with their spare money rather than using it in a sensible way. It’s a slippery slope but people just need a bit of hope in this world that can be depressing as hell at times.

For reference, paying £300 pm net (£375 gross) into a SIPP for 10 years, using a well diversified portfolio of assets - rebalanced when necessary - could generate a pension fund of £115,000. Imagine having that at age 30 to build on for your future retirement.

That seems an incredible return!

I made the mistake of thinking I wasn't in debt so was doing ok when should have been actively saving or planning. So looked ok.on paper but not forward thinking. I've managed to correct that by being lucky enough to change sectors and get a very good job that will close the pension gap and has closed the savings gap. I will be talking to my child about money very openly and future planning. My parents never talked about it, were always on the brink of real financial trouble and very wary of debt/oddly judgemental of things like shares. But I'm also not young and could have thought for myself.

Not just your generation. I am seventy five and at 32 had no spare money, lived from pay day to pay day. Life was very hard for a good few years as it was for many working parents with mortgages. We never though too far ahead, were just glad to get by. It's the same for young people now, that is life. People still manage to have some enjoyment and so they should.

It passes eventually.