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

@hectorzeroni we haven't helped our children at all with housing (no bank of mum and dad) but I do agree that they are lucky to come from a background where working hard, saving and house ownership is the norm.

Oldest dd (now 31) was the first year of 9k a year student debt. It makes a huge difference, especially with Masters added on. She recently got a 6k a year payrise. Due to tax and student debt this will only give her an extra 160 a month. Quite deflating.

I’m 32 and I don’t think this is the case for any of my friends however there is a general feeling that everything is very bleak.

Most of my friends have accepted they will never own a house because private rent is so high and they don’t have family money to dig them out.

There will be no state pension when we retire

1 child is the max because nobody can afford childcare for 2 but can’t afford their house if they stop working.

its all very grim and it feels like there’s no way out unless you’ve got family money or granny daycare.

I think it's unreasonable for you to suggest it's just your age bracket, when it applies to so many. I do think that more should be taught in schools regarding sound financial planning. I also think it can come down simply to finances. If you're a low earner, sometimes the only way you can replace say, a washing machine, is to get it on finance. It doesn't mean you're being bad with money - you're just not in a position to afford one. It's extremely unfortunate that the interest rates are so high and take advantage of this.

I'm lucky that DH and I are comfortable and can afford any emergencies like a broken boiler etc., although we certainly aren't rich. My eldest is in his early 20s and has just bought a house on his own, having saved and saved during his apprenticeship and first couple of years of employment. He'll be moving into a gorgeous little place and easily be able to afford it - and several of his friends are doing the same. That said, the area in which we live has two major employers that pay way above the national living wage, and that certainly helps.

Given market uncertainty, I also suspect a lot of people are very wary of investing and are living very much day to day. I've always kept up investments with a stock broker my family has used for years and years - but I can't hand on heart say I'd be doing the same if I didn't have that in place.

Dh is 34 but he took a gap year and a masters. We paid off his student loans too. We overpaid the mortgage too but we overpaid 10k to get the student loan down to zero.

Of course they have a choice not to 'spend' money they don't have on things that in reality they don't need, surely last year's phone is good enough for example.

I’m the same age. Tbh I think the biggest difference is between those who have had financial help from family and those who haven’t. I know some who have had a significant chunk of their house deposit gifted.

My DCs are all very money aware (31 down to 21). DD1 (just 31) last week told me they could afford to pay off their mortgage if they took all the equity out of her dp's company (they are not intending to). DS and his gf have bought a house well within their means and budget responsibly and dd2 and bf have plenty of deposit saved. All of my children (except dd3 still at university) have no cc debt and plenty in the pension pot already.

I'm sure plenty of young people have no idea and have lots of debt but equally there are many out there doing their best.

left uni with a degree and a large amount of debt.
She now owns her own home (mortgaged to the hilt but managing) her uni debts are paid.

How did she manage to pay off her uni debts so quickly?

Same. I am annoyed that I was part of the irresponsible financial minority. I think my pre-frontal cortex did not close till 35!

Not just your generation. Many in my generation too. I was 40 before I sorted my shit out. Luckily I have put towards a pension consistently since I was 28 but made a million other mistakes along the way.

Biggest mistake these days is consumerism - wanting everything new, not prepared to save for the item, £1000 iPhones etc.

I was lucky & bought my first house when I was single & 26 years old but property was cheap then (1997) but I was only earning 13k and I literally spent all my money on bills/mortgage until I got a new job & pay rise. I had secondhand sofa for about £80 and an old cooker cost about £70 & didn’t even have enough money for new curtains so I put up with the hideous ones that were left in the house. Still had a bit of debt on credit cards just to get by but was careful to keep it under control.

no social media to speak of back then so I never felt the need to keep up etc.
Had a really crap basic Nokia 🤣

The benefits of compound interest (or any sort of compound growth) for the average saver or investor are usually hugely overstated.

"If you had invested £1,000 in ABC shares 30 years ago you would now have £1 million". Except that 30 years ago you didn't have a spare £1,000 knocking around to take a punt on a random company, nor did you have the remotest idea that ABC was going to be hugely successful out of the thousands of shares you could have chosen. We don't hear much about the people who bought shares in XYZ, which went bust when the CFO embezzled all the cash and buggered off to Monaco.

Compound interest on savings is even less likely to bring huge rewards in the real world. The annual return is probably taxable (the calculations often skirt over that), and even if it isn't, inflation has always triumphed over bank interest and always will.

On the other hand, compound interest on a loan or overdraft or credit card - that you are paying - can very easily mount up. Because unlike the positive form where you start with nothing and initially accumulate almost no interest, you are starting with that large chunk of debt and it just gets bigger. And of course the compounding rate isn't 2.97% APR, it's 29.7%.

Because of all that, the single most important rule of financial literacy is to spend less than you earn, every month. If in any given month you have to spend more because of a major purchase, make a plan now to spend less for the next 3 or 6 months until you catch up. Don't kick that can down the road and tell yourself you'll do it later, because you won't. Of course some people live hand to mouth due to low incomes and necessarily high outgoings, but it seems tragic to me that people with reasonable jobs and decent incomes get into financial trouble due to excessive spending on discretionary consumption (including, these days, a lot of delivery meals and £5 sloppaccinos).

Once you are spending less than you earn, you can slowly start to save. But don't kid yourself - accumulating wealth this way is slow and hard. It's not going to magically double in four years (unless you start earning and saving a lot more). About the best you can hope for, with reasonably investments (e.g., put 100-minus-your-age-% into a low-cost worldwide share tracker fund) is to protect your savings against inflation, with maybe 3% extra APR growth on top over the longer term. There is no magic bullet and everyone has to choose how much gratification to delay, and for how long.

I don’t think that’s the case at all. I just think it helps you to feel superior to believe everyone else uneducated and you be truth seer

I use buy now pay later frequently, even though I have the money in the bank to pay for the purchase. I also use credit cards. They are good mechanisms to establish a credit history for more significant purchases.

What I see frequently is live for now worry later. I worked with someone who was in their 50s, regular lengthy overseas holidays, didn't own a house. They were on a decent income and could have purchased a suitable property with deposit saved from not travelling overseas (much more expensive from Australia to travel to Europe). They're now in their 70s, pension, struggling to meet rent in a very competitive rental market.

That attitude is across all generations. Have the experiences, worry later. I get having no money. In Australia the average age for first home buyers is late 30s. If you give up in your 20s and 30s there's zero chance.

And that I agree with.

That’s why the saying is ‘the first 100k is a bitch’.

And that’s mainly because once you have 100k. You likely do have money you can ‘lose’. And thus the stocks and shares become possible. And your home & dry.

What do you think the biggest mistake is?

Being born at the wrong time regarding wage stagnation & house prices vs wages.

Yes to pensions. When people say I've have 500k in my pension and other people say I'll never have that....it's realising that they never actually paid 500k into the pension, they just started early and let compound interest work. Once you save 100k the interest becomes exponential.

Whilst that’s a nice paper excercise and does work in maths world. In real world you have to compare RPI and returns from saving (unless you have a considerable amount of excess that it doesn’t matter anyway).

So I think the issue is for people in 20s and 30s the U.K. savings vehicles such as ISA are not great for keeping up with RPI if you need to use a cash ISA as it’s likely you will need short term access to that money.

Sure stocks and shares ISA definately beats RPI in most years. But cash ISAs are lot closer to RPI and in these recent hyperinflation years people’s savings actually been eroded away.

So to me it has made no sense to save in the last 5 years.

God its crazy - I agree there is WAY too much emphasis on spending. I've often thought this, that since the second world war the predominant identity available to people is as a consumer.

Shopping in malls, shopping online, shopping for deals etc. Made worse by social media which tells you to consume more and buy your identity. Even MSE which people worship (and is good) is also reinforcing people as consumers in a marketplace. Whereas if we explicitly said this non material thing (e.g. kindness) has value, and how do we build society based on that, we would ironically probably all be better off.

Not just your generation - I'm 44 and that was me in my 30s too. Its the country- financial education is appalling.

I think also the sense of whats the point - it's really faulty thinking because the best time to start to save is always now. There's a whole course run by Rebel Finance School about finances - it teaches about compound interest etc. They have an example on it called Never Bothered Ned who they use to show what happens if you never bother (answer is you end up with nothing, versus actually doing quite well once compound interest kicks in and starts to work in your favour).

With inflation what it currently is I am not really bothered.

Sure when we were on 1% or so I didnt have any loans, credit cards, car finance or debts etc. Saving actually made sense. Prices were relatively stable.

Now I think whats the point. £1000 today is going to be pittance in 10/ 20/ 30 years. The price of everything is just doubling before your eyes at every turn.

I may as well spend everything and more at this point in time.

That might sound paradoxical as interest rates are higher so borrowing costs more; but it depends what way you look at it.

The table I have been meaning to buy for the past 3 years is now double the price it was if I had just bloody bought it when I first saw it. I still want to buy the table. So now I just need to pay more.

Whilst I agree for many there is no choice, it does often seem that far too many things are deemed “essential” when they’re really not, eg regular appointments for nails and eyelashes etc, multiple tv subscriptions, multiple holidays/luxury holidays, frequent brunches out etc. and I think seeing others apparently having all these things on social media has a huge effect on younger people especially feeling they’re entitled to a certain lifestyle.

Hmm, is it a mistake though? I'm 34, went to uni, paid off my student loan, own a 4 bed house with DH, both have good stable careers, have paid into pension plans for over a decade. But... The future doesn't look bright. Retirement seems like a pipe dream so what was it all for? Why am I paying hundreds per month into a pension scheme when I'm unlikely to see that money? It does make me wonder if we're the mugs.