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?

On our local fb page people seem to sell a sofa that they bought a year ago because it doesnt go with their new colour scheme etc.

^^ majority of my furniture comes from fb,eBay, charity shops ect. I just can't get my head around spending so much money on new, then getting rid when it's still got so much life in it, for a new decor scheme. I've had some amazing finds.

You e just got to watch TikTok and young people buying a house, they rip everything out at once and start again...

There doesn’t seem to be any need to make so and mend, in a world of recycling. This seems odd

Back in the 80s I had friends buy stuff on HP and by the time they’d paid for it the goods needed replacing.

Some people are good with money others squander and have nothing to show

I'm old enough to remember the advent of the 'flexible friend', credit scoring replacing a hard staring interview with the local bank manager and typewritten overdraft records diarised for review. In retrospect I suspect it saved a lot of sleepless nights.

Since then having a dh who ran up huge, computer authorised (and now repaid after years of sweat and tears)debt behind my back, we now don't own anything that isn't paid for upfront. I run the finances and neither of us have any truck with credit.

If I can't buy it outright I don't want it.

@inmyslippers

On our local fb page people seem to sell a sofa that they bought a year ago because it doesnt go with their new colour scheme etc.

^^ majority of my furniture comes from fb,eBay, charity shops ect. I just can't get my head around spending so much money on new, then getting rid when it's still got so much life in it, for a new decor scheme. I've had some amazing finds.

I think some of this is just a different mentality.

I wouldn't dream of deciding to redecorate so getting rid of a 2 year old perfectly good sofa that didn't match not because I think it's 'wrong' it just wouldn't really occur to me to do that.

I want to redecorate my sitting room, I'm really bored of it, but I am waiting for my sofa to be ready to replace before I do so I'll redecorate and buy a new sofa at the same time!

I think people are drawing a false opposition between saving and enjoying life. I am a great believer in spending money on things that matter to you and not spending on things that don’t. I don’t care about having the latest phone so I have a second hand iPhone. We have a second hand car because we live in London so don’t drive a lot. I do pay school fees because it gave me the choice of school I wanted. I have plenty of savings and investments because I am over 50 and don’t want to work forever. I don’t care about designer clothing but spent stupid amounts on taking the DC to the Olympics, RWC, Football, Rowing etc.

I think the consumerist lifestyle that is pushed on people stops people thinking about what matters to them. Do you want the handbag because you love it or because you feel you ought to have it? If you love it and can afford it - good luck to you. If you feel you ought to have it or can’t afford it - why do you want to buy it? SM creates artificial signs of success and happiness.

The other point that others have alluded to, is that wealthy people transfer wealth and advantage to their children ( in general). The parents who pay off student loans and fund house deposits let alone inheritance. You can’t pass on your Sky subscription and weekly manicure to the children. If you are spending it all and then some you won’t be passing anything on.

I think this will depend a lot on your social group. People I know seem to live within their means and don’t get into debt (aside from mortgages and student loans, which are unavoidable).

So, my guess is that you do live in “a bubble of financial irresponsibility”, at least relative to the bubble that I live in.

The younger people I know tend to lean towards the “FIRE” principle.
en.wikipedia.org/wiki/FIRE_movement

@BLToutanowhere

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.

That's the biggest issue with credit imo. Like you said 20 or 30 quid here seems totally affordable, then your boiler blows and you need to get a loan for that because instead of saving the 20/30 quid you've been spending it on finance so you have no savings, then suddenly its 100 a month in repayments and you're having to tighten the belt a bit on treats, but it's OK it's just treats you're cutting out on, then your washing machine needs replacing and it's zero treats and actually you're cutting down on the groceries to make ends meet and you've got literally no wiggle room left at all. Then what happens when you have a leak/your car needs fixing /you get made redundant and the only job you can get is a drop in wage, suddenly that afford finance you took out 2 years ago is a weight around your neck that you can't afford. It's very easy to get into debt thinking that it's an affordable monthly repayment, but life loves to throw curveballs at you. Best to save and buy outright, credit should be for absolute emergencies only

Definitely. there are some statistics on the MSE open uni course which shows the average british person saves 0.37% of their disposable income, compared to an EU average of 3.7% and highs of 15% in places like sweden.

Usually on threads like these people can't wait to jump on to say how some people just can't afford to save and of course that's true, there are people struggling day to day to survive. But for the 80% of people who went on at least one holiday abroad in 2019, the people who get a new top of the range smartphone on contract for £40-60 per month, the people who are leasing cars at the price of someone else's mortgage (82% of new cars were bought via PCP in 2017, by 2019 91% of new cars were bought on credit) - for that (significant) proportion of the population then of course they could have chosen to put that money into their savings instead, they just didn't want to.

That being said debt breeds debt. If you're struggling to make ends meet and your washing machine needs replacing, you can't afford one outright so you get one on credit, then your disposal income drops by the repayment amount per month, there is no way you're affording to replace anything else if it breaks so God forbid it does you're putting that on debt too and before you know it your debts spiraled. Anyone who can save, should, and only buy outright things they want. Those who struggle to make ends meet living frugally are the unlucky ones with very limited options unfortunately

Have always lived within my means and the only debt I have ever had is my mortgage (one-bedroom flat). Don't have a credit card. I'm 47 and we were pretty poor when I was young (clothed solely from jumble sales, didn't go on holiday until I was 13, didn't go abroad until 9 years ago) and think that has a lot to do with it. If you wanted something, you saved for it first. I earn £24k per year and currently have savings of £27k. Don't have expensive hobbies but a good social life. But we'll aware I'm rare these days. I'm know full well would be different story if I had kids.

^^ majority of my furniture comes from fb,eBay, charity shops ect. I just can't get my head around spending so much money on new, then getting rid when it's still got so much life in it, for a new decor scheme. I've had some amazing finds.

Yes while I find it a bit mind boggling that people would spend 4 figures on a sofa they're going to have for less than 2 years, its good news for bargain hunters! Weve had a sofa, bed and dishwasher from local fb. In fact everyone (including the cats) prefers the bargain sofa from fb to an expensive one DH bought before we married.

On the one hand i do understand some loaning and credit card debt as with all the good intentions in the world if you need something big quickly its a handy thing to do and boosts your credit score. What i dont understand is people using klarna and other credit and loans to buy clothes and things you could literally save a month for and buy in full.

Like @EveningOverRooftops and @nsky I pinch pennies so I can spend on nice things. I wait for sales, stalk things on ebay, buy stuff on consignment/second hand, hoard credit card points and airmiles etc. but when DH and I spend we REALLY go for it.

We still live within our means, we still have decent savings, but we don't live in Dickensian misery, sleeping on the floor with no furniture, there is a middle way.

If you went off my Instagram, like many posters seem to be doing, maybe you'd assume i'm in a lot of debt. I've got a nice flat in an expensive area with some very nice furniture, a lot of designer clothes and, pre-Covid had a bit of a penchant for holidaying at 5* hotels (Ritz-Carlrtons a speciality). But the flat was a wreck we had to fix up, and we still have awful bathrooms, half the furniture was inherited and the rest bought in the sales, the designer clothes are vintage, sample sales or second hand and the holidays were paid for with points.

[quote BJHair]@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 😂[/quote]
Quite right.

Early life can be really challenging, but the earlier you can do without a bit and put a bit aside, the easier the rest of your life will be. The earlier the better. 😊

We have a high income and have savings and investments (no one would know the details though as I’ve never told them and they’ve never asked).
However we do use credit when it works for us. Interest free credit rather than taking the money out of our high interest yielding investment. We have one company car and lease our second car... insurance is included, if something goes wrong they pick it up, fix it and bring it back. Same for services. It works for us, with 2 full time working parents and 3 young children we’re time poor rather than cash poor so it takes the admin out of things.

This is a bit of an eye opener to me. I have no idea what other peoples' financial situations are, although a couple of friends have got divorced in recent years and have admitted that they've only been paying the interest on their mortgage all these years so have barely any equity to split with their ex.

@inmyslippers

On our local fb page people seem to sell a sofa that they bought a year ago because it doesnt go with their new colour scheme etc.

^^ majority of my furniture comes from fb,eBay, charity shops ect. I just can't get my head around spending so much money on new, then getting rid when it's still got so much life in it, for a new decor scheme. I've had some amazing finds.

I was brought up in the 70's and 80's, the idea of redecorating every year (which seems to be a thing) would have been outrageous! And when you did redecorate you looked at what you had in terms of carpets, furniture etc that still had a good life span in them and redecorated around them. You didnt pick a totally different colour scheme and replace everything. Thats how I do it.

I suspect that this is why I have only ever owned neutral colours in furniture and carpets etc because the idea of saying "I want to change my red themed room for blue so I need to replace everything" is anathema to me!

I have only ever owned one new sofa and that was a very heavily discounted display one from MFI (remember them?!) the rest have all been FB/ebay/Freecycle finds!

I suspect that this is why I have only ever owned neutral colours in furniture and carpets etc because the idea of saying "I want to change my red themed room for blue so I need to replace everything" is anathema to me!

I don’t know anyone who does this (replace/redecorate everything regularly, I mean) and most of our friends/acquaintances are pretty affluent.

I've just remembered..... about 15 years ago I bought a babydan room divider stair gate thing from a local family. I went round and the dad was hoofing about a load of laminate flooring. I said, small talk, "Oh are you having a change?" and he said in a very pissed off voice...."No, its only been in a week and then she changed her mind...." and took me into a house that smelled of brand new carpet. 2 new floor coverings in less than a fortnight? No wonder he was pissed off!' In my world it woul dhave been "Oh shit, I dont like it. Ah well, better get used to it because its staying".

@shrodingersbiscuit

I'm going to be a dissenting voice of defence and say sometimes nowadays being a saver doesn't necessarily pay off like it did for previous generations?

House prices are so high they're completely out of reach - even if you manage to save some money after you pay rent every month, it's never going to get you even near a deposit. I'm on a good salary but my rent (for a basic, cheap house) is 64% of my wage - I'm never going to be able to save enough for a deposit so it demotivates saving for one.

We graduate balls deep in debt - the more we earn the more we pay back. Additionally, if you have over a certain amount of savings and the worst does happen, you'll have to use that before you can access any help (like disability benefits or anything). If you own a house, it will be taken to pay for your care. People my age are going to work until our deaths anyway, our pensionable age is so high and pensions are so shit. So I think people think what's the bloody point in having any savings, may as well spend it now and have some fun?

House prices are not "so high they're completely out of reach" for the two thirds of the population who do not live in London or the Home Counties. I bought my home a couple of years ago at the age of 25, having rented a flat beforehand. I'm now working any overtime I can get, heavily overpaying my mortgage and any money earned over a certain level goes into a "renovation fund" to refit my house (it's 185 years old, something of a money pit but I love it). Then I'll be mortgage-free and in a "forever home".

I wouldn't even look on a student loan as "debt" to be honest. It's more of a 9% additional income tax.

I have been having these thoughts myself recently. Myself and my partner are in well paid jobs and we do have a mortgage. I employ several people some of which are paid a third of what I earn as part time and no family wealth or high earning partners. We drive old but paid for cars, our house has a list of jobs as long as your arm, but until we can afford to pay for new things without delving into our rainy day fund I refuse to shell out for. They drive brand new SUV's, have house renovations constantly and regular expensive beauty treatments. I really don't get it.

@Rumdiddly

I have been having these thoughts myself recently. Myself and my partner are in well paid jobs and we do have a mortgage. I employ several people some of which are paid a third of what I earn as part time and no family wealth or high earning partners. We drive old but paid for cars, our house has a list of jobs as long as your arm, but until we can afford to pay for new things without delving into our rainy day fund I refuse to shell out for. They drive brand new SUV's, have house renovations constantly and regular expensive beauty treatments. I really don't get it.

You don’t have to ‘get it’ though. As long as they’re not asking you for cash, it’s their business how they finance things.

I think you are allowed 20k each in savings before benefits would even be means teste

^^its 6k which is nowhere near a house deposit

@Whatisthisfuckery, I think one issue is that because interest rates are SO low now, there's no good argument for saving money. A person with spare cash is better off buying a (possibly) appreciating asset like a buy to let, which generates more money in rent than putting it into a pension fund. So houses and property are pension funds, to be drawn down in old age.

@inmyslippers

I think you are allowed 20k each in savings before benefits would even be means teste

^^its 6k which is nowhere near a house deposit

Correct. 6k total per claim so if you are a couple, 3k each at the most which would barely cover costs, much less a deposit.