Savings

[UnaCorda]

It seems that very few people have a financial cushion of any sort and I'm curious as to why this is. I understand that some people are on a low/minimum wage or perhaps have unexpected outgoings, but there must be a lot of people to whom this doesn't apply.

Is it simply a matter of priorities? Is the cost of living simply too high to allow most people to save? Or do most people just spend most of their salary every month, regardless of any pay rise?

Or am I wrong and most middle-income or high earners do have a decent amount put away for the proverbial rainy day?

Disclaimer: I'm not asking this from the position of having a six-figure salary (or even a particularly high five-figure one) or a high-earning husband or a trust fund, etc.

Also, obviously people's financial situation could be completely different at the moment, so I suppose I'm referring to a pre-Covid situation.

I understand what ypu are meaning - there are people who could save but dont. Which is very different than cant save. I think there isnt a huge incentive to save. Interests rates are low. Most stuff can be bought interest free and a lot of us watched pensions get 'lost' in big pension scandals. Then you have issues like care home fees. I think we've lost the saving habit.

There will always be people who barely scrape a living and can’t save. And those who earn a a lot of money who just won’t save. And every type in between. People are different.

DH and I have a very high income but it was luck of the draw that we both prioritised savings and investments first. We could have easily spent the lot. It’s hard to change from a spendthrift to a saver if you aren’t naturally inclined. Hopefully the one silver lining out of this pandemic will be that people without any sort of financial cushion will now get one, sometimes you need a little shock to the system (though this was a particularly horrible one)

Hopefully the one silver lining out of this pandemic will be that people without any sort of financial cushion will now get one

how would this come about?

How are all the people losing their jobs and having to go on UC supposed to get a financial cushion?

Obviously those who have nothing spare can’t save. Don’t be daft.

Hopefully the one silver lining out of this pandemic will be that people without any sort of financial cushion will now get one

how would this come about? confused

Some people have managed to save more during lockdown. My friend for example no longer had to pay for full time childcare or rail passes to commute to her job. She ended up saving money for a few weeks even with a slight decrease in income.

This idea that some people are able to save because they "prioritise" is silly

No it's not, it absolutely is a matter of priorities for a lot of people. Seemingly small differences in spending habits can add up significantly over time.

Obviously there are some people who don't have enough for the basics, and can't afford to save, or buy coffee etc and there are also people who have lots of money, so have savings and can also afford as much coffee as they like.

But there are also a lot of people in the middle who have some spare money, but what they do with it varies enormously. As illustrated by me and DP. It is the rule in our house that if you take food for lunch etc from home, it comes out of the grocery shopping budget, and we can buy anything we like within reason as part of the supermarket shop for this, or leftovers from dinner are often available. Because bought lunches, coffees etc are quite a bit more expensive, this has to come out of personal spending money, which we both get the same amount.

For a good few years, DP bought breakfast or lunch, sometimes both, most days while at work, and would easily spend £2-250 pm on this, DP also smoked, but I didn't. I almost always took leftovers or home made food and had basic tea or coffee at work.

Because I spent almost far far less on lunch and didn't smoke, I just saved the money that I didn't spend. Fast forward about 10 years of managing our money in this way and I have nearly £20k in premium bonds that are mine and mine alone (we have joint savings too) whereas DP has no personal savings. From just one significant difference in spending habits.

Savings rates are currently very poor. Most are currently under 1 percent

The Government wants people to spend to help the economy grow again

I've had mainly day funds, but they keep getting wiped out by events. So I did try to save for bad times - but lately we've had way more bad times than good.
Wages keep going down and I can't even get a job at all at present.

mainly=rainy

Once you get into debt regardless of income it is very difficult to get out of. Our economy is debt based so we are all encouraged to spend more than we have. We have a very good income but the minute you start buying anything on credit you are funding the super rich.

I’m a single parent who has never received a penny in maintenance from the absent parent. I work 2 jobs to keep a roof over our heads and maintain a fair standard of living, which doesn’t allow for savings. We’ve had one foreign holiday in a decade, which my parents helped with, and my car was a gift which I’m paying off on a monthly basis. I put aside what I can each month, but that then pays for things like breakages, presents, etc. There is no capacity in my budget to save beyond that.

I’m always saving for something particular, then once I’ve reached the target amount I spend it so it’s gone and I have to start again from scratch. So first of all it was a house deposit, then a car, then some work on the house, I also put a small amount away for our annual holiday but obviously that then goes when we book the holiday.

Not sure how people manage to save for a house deposit and for general savings at the same time as house prices rise so quickly you wouldn’t be able to keep up with the rise if you were splitting your cash in two directions.

The only people I can see being able to gain large savings are couples whose salaries continue to rise throughout their career and who don’t have kids, so their spending doesn’t increase. No idea how people who want to upsize and have kids do it, as there’s always something shorter term to save for!

If anyone had any tips, let me know!

@Hingeandbracket Your username shows great strength of character & good taste. I am certain, with such attributes, you will find a job that suits your qualities quite soon 💐

Some people just have no sense of direction and give 0 thought about what will happen if they dont save. It's like tomorrow doesnt exist for some.

@barbaraofseville gives a really good example. Saving is absolutely a choice for many people, but a lot choose to spend on a lifestyle instead.

If you have no money spare after bills and are on a very low income then clearly you will be unable to save and the OP has stated several times that this is not what she is referring to.

www.cracked.com/blog/the-5-stupidest-habits-you-develop-growing-up-poor/

^^ this is a great article by someone with direct experience of growing up in poverty.

I grew up in a household that was frugal but actually reasonably well-off, so grew up with very financially conservative habits.

I knew a girl who was from a poor background and observed that:

• she found it easy to justify big expenses I couldn't as necessary (spent her entire 11k inheritance on a nearly new car as she 'needed something reliable')
• she found it easy to justify dodging her Student Loan repayment because she 'couldn't afford it' - whilst getting a make up subscription box
• she had an iPhone on a £45/m contract, Netflix, various other toys
• we debated whether or not £18/week was enough to live on for food after some news story, and declared it 'totally impossible'

Now I spent £600 on my first car, £1350 on my second (which lasted me 5 years). My third was £3000.

I had a sim only contract and a second hand phone. I had lived on £13/week food in my previous job to prioritise savings.

She had a lot of attitude and issues around money that I really struggled to reconcile with the amount of need she claimed to have. But the article above really articulates well how growing up poor can change your attitude to money in very contradictory ways.

I don't need a 'nice' car, I have experience of seeing my money stack up into big long term things, and I have frugal habits that make my money go further. Even on a low wage I was able and willing to budget quite severely, because it was easy to see the long term goal serviced by my short-term frugality.

Another woman at work really pissed me off by describing my habits as 'how the rich stay rich', because if I'd described hers as being 'how the poor stay poor' then there'd have been hell to pay, but there is a grain of truth in it for some people.

(Interestingly my sister doesn't have those habits, so it's not just about background, but disposition.)

My grandad once told me - don’t save what you don’t spend, spend what you don’t save.

This ^ 100%

When I was about to start work someone told me that you should always set up a standing order, on payday, into a separate saving account, so you never have that money in the first place. If you run out of money in your normal account before you run out of month, then yes, you can still take the money out of your savings account, but you have to make a conscious decision so to do. So - if your fridge has died, then yes, that is a good reason to raid your savings, however, if you just see another pair of shoes you happen to fancy, when window shopping, then it isn't.
I've done this since my first pay , almost 40 years ago. Yes, we've had some lean years when every month we had to take out of savings, but, for the majority, we've still been able to save a little on a regular basis rather than frittering away money when we didn't actually need stuff.

A reminder for the people who haven't read the thread carefully - the OP isn't talking about the people who are brassic. She is talking about people who do have money left after paying rent / mortgage, bills, travel and food.

Some people just can't afford savings. But some people just can't resist spending every penny they have.
My DH has a friend, he and his wife earn more than us and bought their house much longer ago for less money. But every month they're back into their overdraft, they've refinanced their house twice in the past 10yr, and that money has just disappeared, they've had a few windfalls in the low thousands, disapeared. They spend insane amounts of money but have never had a holiday. Some people just can't help themselves, they see money in their account and instantly want to spend it on something.

OP, I also work in the charity sector. I find it impressive you have paid off your mortgage and have 2 years salary saved. That's pretty incredible and definitely not the norm.