To think living within your means has become the exception?

[SmokeyApo]

Hi all, I just wanted to share some observations and hear other people's inputs.

It seems to me that is becoming more and more rare for people to live within their means and try to save a little money for a rainy day. In my circles I know many people on good and even great salaries, that lead seemingly extremely expensive lifestyles and don't save a penny, or even go into debt to afford extravagant holidays or cars.

A good friend of mine is a senior executive in tech, makes an absolute fortune and had to ask around his friends (me included) to borrow money when he bought a house last year, because he couldn't cover the down payment. Another friend of mine got divorced last year, both spouses on really excellent wages, and it turned out that they had almost no assets to share after being married for 15 years because they had spent everything they got.

I am starting to wonder if I live in a bubble of financial irresponsibility or if this phenomenon is widespread. AIBU to think that saving and being mindful with money has become the exception rather than the rule?

Plus we keep being told life as we know it will end due to global warming, or there might be another pandemic. I will certainly be spending more money on holidays and life experiences when we are allowed to again.

What people need to appreciate is the moment you need credit is the moment the banks won't give it to you. Every time. Everybody needs an emergency fund, even if it's only built up at £2 a week in very difficult circumstances - ideally building up to at least three to six months outgoings over time. To rely on being able to withdraw very illiquid house equity simply will normally not work for most people. In times of trouble, cash is king. Ask all the profitable businesses who have sadly gone bust during Covid. Something I have learned during a fairly privileged but challenging life.

YANBU, OP, and it's not just about "bashing" the younger generation. My parents taught me about the dangers of debt and the value of living within your means, having savings, etc. They are in their late 50s, now, I'm 40-ish. There were people in their generation who didn't live within their means. There are people in my generation who don't, and the next generation or two is no different. It's not only 20-somethings who live this way.

I would be a saver/investor regardless of the interest rates. I like to feel that if something unexpected happens, we're covered (as well as we can be). Spending the money as soon as we get it isn't sticking it to the man or the bank or whomever. Even if our money doesn't grow, at least there's something there waiting for the time we need it, and at least we won't be in unnecessary debt if our circumstances change and we no longer bring in as much money to pay down that debt.

It’s difficult though. Life is really expensive. Holidays are not considered a luxury, more of an expectation - by individuals as well as socially. Cars as well, I’ve found it harder to keep older cars running these days. I had a 7yo car needing 4k of repairs (more than its value). So I want a newer car that I can rely on. 20 years ago, loads of people had old cars, they had less tech in them and were easier to fix. “Everyone” has an iPhone or smartphone - hugely expensive. There are stealth charges on everything these days - pay your council tax but get charged extra to get the garden waste picked up. I find that 20 years ago, I could go a while without opening my wallet. But these days, although I’m generally paying for stuff on my phone, I am making payments all the bloody time for one thing or another. I also find things break more easily and quickly - especially with a family. This year alone we unexpectedly had to replace the washing machine, tumble dryer and boiler. They all broke within about 4 weeks of each other. We are haemorrhaging money! Kids are always outgrowing things. Not just clothes and shoes but bikes, beds and all sorts.

YANBU OP, but I think there's a balance to be had.

I saved throughout my 20s to put a deposit down on a flat that turned out to have 'dangerous' cladding, so until the Government reverses its regs on that (if it ever does) then it will have turned out to be a very poor decision to save and try and invest. I would have been better off splurging that many thousands of £ on holidays and clothes.

So throughout my 30s, after being burnt from that experience, I spent most of what I earned (rarely more, always wanted to pay off my debts completely etc.). Spent it on holidays and experiences.

Now that the pandemic has put paid to international travel, I don't regret doing that one bit. In fact I wish I'd done a bit more!

However I was very glad to have a small rainy day fund when I was made redundant recently. So it's swings and roundabouts really; I wouldn't advise anyone to curtail their youth and miss out on fun they can afford by scrimping hugely but on the other hand don't like seeing people live beyond their means either.

I think loads of people overspend now,as it's easy for them to get loans and stuff on credit etc. I know lots of people who have dropped themselves in the mire with credit card debt,and getting a must have fancy car,and borrowing a few thousand pounds to go on some exotic holiday. I would never feel sorry for anyone who gets into debt,if they are the types of people, who simply Have to get everything , whenever they feel like it.

You never know when there might be a big down fall for some people.and they might have massive debts, that they can't deal with.

Yanbu but I am sure this point has been made many times, living within your means has simply become harder! I don't care about all the ranting about gadgets and electronics and cars. These things are pretty much essential in this day and age, cars are often ESSENTIAL for people to get to work because subsidised public transport does not exist.

The cost of living and housing has run away from average wages and salaries in the last 20/30/40 years (all the time I have been an adult) and it is no surprise people are in debt.

@thebillyotea

Some can save. Others like to spend.

there has to be a balance. Life is too short.

If the lockdown and the pandemic has proven something, is that you'd be a fool not enjoying yourself whilst you can. When lockdown has made no difference to your life because you have scrimped and saved, and refused any joy, any holiday abroad, any life... you basically wasted your life.

Going into ridiculous debts for a wedding, a Chelsea Tractor bigger than your house, or putting grey sparkling carpet from floor to ceiling in your house is the over extreme.. and not clever either.

Balance.

THIS.

I have enough to cover my basic living expenses for 3 months (aiming for 6 by the end of this year). I also put some in S&S ISA and I use small amounts for other investments. I enjoy good quality food, so I spend more than average on this, but I don't have a car, don't have TV, buy vintage/second hand clothes (once a year probably). Pre-pandemic I would have foreign holidays 2-3 times a year, but I organise them myself so I save a lot. I don't have a credit card or any debt really. I live within my means, but I enjoy my life (well, I used to before covid).

I think that children take after their parents in this regard. My two are both in uni, but both have had part-time jobs and have used the money to open tax-advantaged retirement accounts.

I hang around in the Dave Ramsey, YNAB, MamaFurFur, Meaningful Money, FI/RE forums and groups, so my like-minded people are not like this. Our movement is growing.

For some finance works. It just becomes so easy to do. £30 a month here, £20 there and so on. Then something you need breaks. More money. Then you're pushing the envelope. A bad month. Borrow a little to live on. More repayments. Transfer the balance. Smaller minimum, great. Buy something else. And so on.

That's how it works for some people. Not for all mind you.

It's the knowing when to stop.

I am starting to wonder if I live in a bubble of financial irresponsibility or if this phenomenon is widespread.

Yes, yes, you are far more superior to those other people who earn lots of money. Is that what you are looking for?

I used to work for (when they were a big thing) a payday loan company. As a loan underwriter (I know, I know before anyone shouts at me I was young and I was only there a year). It was all done manually, someone would apply then send in their bank statements in covering 3 months, I would review them and if they could afford their £250 plus £50 interest based on that then they'd get their loan. Most couldn't (unsurprisingly), then the company made application and acceptance done by computer systems and funnily enough because people would just lie on their applications and not prove anything the lending rate went through the roof. As did the default rate.

You would be astonished at some people's finances. Now most people applying for a payday loan aren't going to have the best finances or they wouldn't be applying but these people, who were usually living in overdrafts basically had all of their wages gone before they'd even been shopping. But not on mortgages or rent. Bills, many many credit card payments, multiple loan payments, sky tv, car finance, porn subscriptions (lots of those) gambling websites, I saw it all.

I later moved into more mainstream (and reputable) consumer credit lending where people's finances were more 'normal'. Still, I rejected 75% of the loan applications I received because people just applied for things they so clearly could not afford.

There is a lot of irresponsible lending out there - I've seen it personally though I hope ten years down the line it isn't quite so bad anymore. But there is also a huge, huge amount of irresponsible borrowing that goes on too. I clearly recall being really abused over the phone when I declined a loan application for a man who had relatively normal looking finances, but he was just running up debt, taking a loan to pay it all off (consolidation) but then running it up again with basic overspending. He'd done it three times and I stopped him doing it again - with our company anyway. We, as standard, sent information for free of charge debt management charities to people like this and I got our letter back from him with FUCK YOU DIE BITCH written across it.

I also remember having a lady cry over the phone when I declined her begging me to reconsider (I couldn't regardless, I had set rules to follow it wasn't a personal decision). She was upset because she'd paid a deposit for an expensive holiday and then needed the loan to pay for the actual holiday. A 5k loan. She couldn't afford the credit she already had!

I no longer work in consumer lending

I don't know, I've always had savings but I would never go around telling people what I have so who knows what others have saved?

I've also been fortunate that I've never had to use up all my savings as others have had to over the past year/due to ill health/circumstances etc.

I also know savings are being eroded by inflation at the moment! And will be spending more again as soon as restrictions lifted again.

@SelkieBoru
20k before benefits are means tested 😂😂 hope you never have to claim - you might find it a big shock if you did .
It’s 6k you can have without it being affected
After that it’s between 6k -16k I think for every 250 over 6 k they take a certain amount off
Over 16k and you get nothing
With the old tax / child credits it was slightly different
Last year loads if people who had been saving for a house and had a big deposit all of a sudden found they couldn’t get any means tested benefits like ESA / Housing benefit Universal Credit as they had a large amount of savings that they had to use first

My DH and I had very different ideas about money, finance, credit etc when we first met. We've balanced each other out.

My DH has gone from using pay day loans and having lots of debt on credit cards to having savings and no consumer debt.

I've relaxed a little about spending money and using finance/credit wisely.

We have no consumer debt now, we save up for things we want, our car is 10 years old and we're overpaying our mortgage. We also have a small amount of savings.

I'm hoping that my DH will resist the urge to upgrade our car for as long as possible as not having a car loan allows us to overpay the mortgage.

I've also managed to train DH to save up for regular expenditure (e.g. Christmas) or big one-offs (e.g. a special camp for our DS).

Most people I know live within their means, certainly no flashy holidays, gadgets, cars, clothes where we are.

We (well DH) were probably the worst offenders and we've managed to turn over a new leaf.

I don't mind using credit if I can afford the repayments. Means I can buy something now rather than wait. I like that PayPal pay in 3 option, spread out the cost with no interest.

But I have savings too, saving for a wedding and house deposit. I know people who have gotten a deposit for a house from parents, don't pay it back, spend all their money on expensive cars, furniture etc and then have to ask their parents for money to go on holiday. Yet they have well paid jobs, they just save nothing.

But that's their problem not mine. I just don't lend anything to anyone.

@Hopeisnotastrategy
“ cash is king “ couldn’t agree more
I have a large amount of cash 😂 in my house
It’s in a secure hidden safe in a fire proof bag so I’m not worried about it getting stolen or burnt in a fire .
I don’t particularly trust the banks so I have a few grand in my two bank accounts but I don’t really touch it I have credit cards with high limits but rarely use them. Unless it’s something that is expensive and I want the protection that a credit card can give me .

But the one thing that the last year taught me is that having a decent amount of savings means that last year barely affected me or my family in fact our savings went up as there was little to spend money on last year .

One of my friends asked me once why I had so much in savings and what was I saving for
I think it hurt his head when I said I wasn’t actually saving for anything 😂

I’m super thrifty but spend on nice things.

Don’t have a credit card.
Overdraft is paid off regular and used for those purchases in an emergency

I repair everything but I save and spend more on items to begin with. I will go without rather than have cheap crap OR if I’m lucky I’ll pick it up in a charity shop.

I’ve spent more the last 6mths though because charity shops have been closed and I’ve lost lots of weight and boredom.

Having to buy books, clothes and puzzles for more than I would normally spend is part of that. Also food, DC home its cost a fortune in grub but also throwing away more than normal because DC is refusing to eat too. Nightmare.

I save to do nice stuff, and sort house stuff as and when needed, saving is good, tho interest rates aren’t.
If my washing machine blew up, I could buy a nice new one, without worrying

If we lived within our means, we would starve! Between DH and I, we simply do not earn enough to cover our bills.

When we were both younger, we saved and actually we have been very frugal. But since having a family things have been tough. We are still trying to get on the property ladder!

Things are much harder for people nowadays. Years ago, you could buy a house for the equivalent of a year’s salary. It’s 16 x that now.

I think there are a few things going on. Salaries have stagnated so it's much easier to get into debt without being extravagant.

On the other hand, there's definitely a push in our culture to live out with your means and lots of things to facilitate it. Granted people should have better self-control. It would be good if there was more financial responsibility and planning taught in schools.

I didnt realise how much money I wasted until the first lockdown and it was physically impossible to do it. It went on take out coffees, grabbing lunch out, impulse clothes buying etc. Never loads all in one go but it adds up. I have moaned for years that I couldnt afford a new pair of Doc Martens as the ones I wanted come in at £200 a pop.

I got paid month 1, had a bit of a tax rebate and some back sick pay, not loads but a few hundred. After bills etc I got to the end of the month and almost all of my wages was still in the bank unspent! So I was basically a month ahead of myself financially with all bills paid etc. While it was nice, it was a very sobering thought. So it turned out that I could have afforded the boots all along if I hadnt spunked money and shite. I bought the boots, put the rest into savings and carried on saving all through. Sadly I no longer have the savings because I was made redundant with no payout (less than 2 years service) and it got me through until my UC paid out. I would have been up shit creek without it.

It has made me really think carefully about where my money goes. I worked out that I was spending nearly £100 a month on coffees and take out "oh sod it lets have chippy/maccies tonight" type food. So we dont do it anymore, we have one take out on pay day and thats it.

A lot of good has come out of the last year for me and giving my head a slap over money is probably the biggest.

Yanbu, a lot of my friends can't do anything close to payday because they have no money left. The same lot who buy cars on credit and go on massive holidays every year. Each to their own but I couldn't live like that.

I think it's been that way for a while. My brother's an accountant, and I remember him telling me about 20 years ago that "you're only as rich as you can borrow"