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?

I've noticed this amongst my peers, I'm mid thirties. We, however, have always been savers. We live fairly frugally and save anything we have spare. We are now planning to extend our kitchen, paying outright, rather than going into debt. Plenty of friends of ours have these huge extended houses and don't get me wrong, they're beautiful, but they are up to their ears in debt to pay for them. I'd rather have the security of savings than have to worry about selling our house if we lost our jobs. During lockdown, DH had to take a temporary pay cut, all of his colleagues were stressing about how they'd make their repayments/mortgage etc, but it didn't really affect us day to day. It wasn't nice, but we just dipped into our rainy day money.

Nofurcoatnoknickers
I have a full house makeover 3 years ago ( live in a one bed terrace), great but still aware of costs.
Kept front door, washing machine and s few bits of furniture ( washing machine replaced).
I do a minimum wage job, own my house via divorce settlement, drive a good low mileage 5 year old car.
Often buy from eBay, do mainly home cooking, hol with family abroad ( they live in Spain and Italy).
And mindful of what I buy, esp food wise, aim to be semi veggie

There seems to be a difference in what people think is essential now. Apparently new cars, takeaways, foreign holidays each year, latest clothes, £100 trainers, newest Playstation, new TVs every few years, takeout coffees, three bed family house as a first property are all essential.

Some of my friends and colleagues wonder how we managed to get a 4 bed house in our early thirties in the South East. It was not having those things for a number of years in our twenties whilst we saved money and bought a tiny run down starter home. We watched others having all of that in their twenties and living off credit cards, then wondering why they couldn't afford to buy the family three bed straight off when they hit their 30s.

One piece of advice I would give. People do need to save. If at any time in the future interest rates or taxes increase, many people may find themselves in great difficulty. The live for today attitude is all very well, but these are not normal times. Eventually, this Pandemic will need to be paid for and my own feeling is a tax rise will come at some point. Please do try and save, if you possibly can.

@ConsuelaHammock

Shrodinger - a nurse spending £1k a month on rent needs to move somewhere more affordable. I don’t think anyone would judge those who don’t have the means to save. That’s not who the op means. I do judge those who have the means to save but choose to piss it up a wall. And then whinge when the pay cheque doesn’t roll in as normal / expected. The poor plan for the weekend, wealthy people plan for the next generation.

But they can't all live in cheap areas. There's no 'cheap' areas up here for example, despite it being the highlands. If you live in the city near the hospital, you pay a lot on rent, especially if you have kids. If you live outside the city in the cheaper areas (and they still aren't that cheap, Dundee is cheaper), then you spend the extra money you save on rent on fuel instead. It will be the same in London, you either live in the centre and spend a lot on rent, or move out and spend more on transport.

Someone on a low income has no chance of buying without help.

For me, saving anything for long term would mean sacrificing any type of pleasure from weekend days out with the kids, to cheap caravan holidays. I would have to give up those 'small luxuries'.
Some would do that, I'm not going to.
I would add I'm unlikely to lose my income due to NHS job which I think helps.
It comes down to an individual acceptance of risk in the end.

@Gothichouse40

One piece of advice I would give. People do need to save. If at any time in the future interest rates or taxes increase, many people may find themselves in great difficulty. The live for today attitude is all very well, but these are not normal times. Eventually, this Pandemic will need to be paid for and my own feeling is a tax rise will come at some point. Please do try and save, if you possibly can.

Agree. It doesn't matter if you follow Martin Lewis and keep moving the money around to the bank account with the best rate, save it in Premium Bonds and gamble the inflation on a small chance of winning. You just need to start and continue. 3-6 months of savings is recommended.

Take a look at this flowchart and see where you are: flowchart.ukpersonal.finance/

It is depressing that people can't buy a home these days in areas that are quite expensive but not particularly wonderful ( such as where I live)
Renting has its advantages too, but it is nice to have your own place and be able to decorate how you want and to know that one day it will be yours ( even if it has to go towards end of life care one day !)
Our parents didn't buy a property so we will never inherit anything or whatever. It was short sighted of them, but they liked being council tenants and not having to worry if the roof fell in.
Buying anything for that generation was what the very rich folk did.
It's sad that many don't have a choice these days though.
It's such an uneven playing field.

@shrodingersbiscuit

Exactly. My parents lived quite frugally when we were kids (we never went abroad on holiday, had 2nd hand clothes, bikes etc) but they bought a semi detached house on one average salary. That is so far out of reach now in so many areas.
The house was probably 3 or 4 x the average salary.
In 1981 average house was around £23k
In 2020 average house was £256k
Wages haven't increased at anywhere near the same rate.

Isn't a big part of the problem that back in the 70's and 80's houses were only 3 or 4 times the average salary, but only one salary was taken into account for mortgages so house prices were based on one average salary. Whilst now two salaries are taken into account (which is great for equality for women) so now house prices are based on 3 or 4 times two average salaries. A couple has much more buying power with two salaries then they did back then, so of course house prices have risen. Awful for people trying to buy by themselves now though.

I truly don't understand how people in debt or with heavy monthly commitments don't seem to worry about it. Do they just think they will never ever lose their job or get ill? Or even fancy a change? I might sign up to a £2k new sofa paid over three years, but in two years I might fall off a roof and not be able to work, so the sofa gets repossessed and now I'd paid £2k (factoring in the interest) for nothing.

I think "spenders" have a level of confidence in their crystal ball abilities that I an constitutionally unable to have. And my life has taken a sharp turn a few times, and I'm only 30! I don't spend all my time worrying about what might be, but that's because I know we've got the money in the bank to weather a storm and our fixed monthly outgoings are reasonably low.

If we were spending every penny every month with nothing in the bank, it would worry me that we might come across something we need money for (either a one-time thing or a new fixed monthly cost) and not have it.

Things that you couldnt afford were bought on hire purchase when I got married, like a washing machine etc. I was brought up to not have anything I couldnt afford by my parents, who really had very little, but they had lived through the war years and made do. When we moved in to our house we had an old second hand cooker, two secondhand armchairs rescued from the tip, and a secondhand bed ! Om still using a set of Swan saucepans that Ive had for fifty years.!

The entire housing market is now based on the assumption of two salaries. Therefore average prices are 3/4/5 times combined two average salaries rather than one.

Therefore if someone tries to buy on their own or one half stops work or goes part time for childcare then they are stuffed.

It's an unexpected side effect of the equalisation of women in the workplace

@Dishwashersaurous indeed. And it makes it tremendously difficult for single people to buy too.

Well said @shrodingersbiscuit

Anyone currently trying to save for a mortgage it's worth having a life time isa. You get 25% off what you save. But can only save 4K a year. Better then any other savings rate out there. As a single person I'm probably not going to earn enough or have a big enough deposit to own outright. Hoping to go down shared ownership route.

@shrodingersbiscuit

I get that the OP meant people on high wages who don't save, but within a few posts this conversation degraded to discussing the 'feckless poor' - a Dickensian fallacy. It's more that I was addressing via the comment that people should just move somewhere cheaper.

Poor people aren't feckless. They are poor because of capitalism, and privilege. People are poor because they don't have enough money to make choices like the rich can - choices are what allows people to drag themselves out of poverty.

People aren't poor because they spend all their money trying to emulate The Kardashians (who, although morally corrupt, are savvy businesswomen). No one has to have their kids on FSM because they spent all their money on weight loss lollipops and handbags to look like Kim K. Seriously, just think about it! It's a lie told to us by rich people to stop us questioning why 1% of the population is hoarding 99% of global wealth. And to stop us realising that until we address that - we aren't doing anything but prop that system up.

People coming on here saying well I bought a cheap house in the 80s, you should rent somewhere cheaper to save money and I know people who didn't buy lunches so they could save up are just missing the point. Inflation renders comparison to previous generations useless. You can't always move somewhere cheaper. Saving 3 quid a day on a meal deal isn't going to pay for your kids to go to University because by 2028 uni tuition is projected to be 30k a year, or buy a house when they're rising 10k a year. If the interest on savings doesn't match inflation it seems pointless - money you could spend on your life now, it's not going to be worth enough in the future. It isn't going to give you choices.

It's really fucking depressing.

Absofuckinglutely!

We're savers. I grew up in 70s and 80s, watching my dad lose jobs, strikes, 3 day weeks. Not enough money. Then they divorced and I watched mum struggle with no maintenance, no tax credits no childcare help, hard worker shit salary. We hid from money collectors. I learned nothing is secure or stable and it scared me. So, I've got over 1 years salary saved. Investments too.
I mainly spend on travel, eating out and plants. Not lately though! I'm trying to loosen a bit though. Can't take it with me.

Saving 3 quid a day on a meal deal isn't going to pay for your kids to go to University because by 2028 uni tuition is projected to be 30k a year, or buy a house when they're rising 10k a year. If the interest on savings doesn't match inflation it seems pointless - money you could spend on your life now, it's not going to be worth enough in the future. It isn't going to give you choices.

But saving 3 quid a day will help when your washing machine breaks down. Or your kids need new shoes.

I don't get the mentality of saying that I cant save enough for a huge thing (deposit, uni,...) so no point in saving anything. And its not just the 3 quid, but lots of other little expenses (see above for the 20 quid a month on credit plus 30 quid for something else etc). It all adds up.

I've been thinking about when we first set up home together in the 1980s. Literally everything was secondhand. We had a model of cooker that now regularly turns up in BBC 50s/60s period dramas! The fridge, the furniture, everything was secondhand. We went to auctions and junk shops to source bargains. We used the launderette around the corner. The first big new purchase we made was a video recorder in 1985. All of our friends were the same. Yet we still managed to travel (interrailing), and we worked hard to save for a house.

I'm 56 now, and that lifestyle is gone forever. As previous posters have said, inflation has outstripped wages. My daughter, in her early 20s, and very sensible with money, (more so than I was at that age!) probably won't be able to buy a house for at least another decade, and that's with substantial help from us and my late father. I'm still stunned that her rent at uni was more than we ever paid in mortgage payments!

It's gone from my parents in the 50s being able to buy a house on one income, to us needing two incomes to buy, and my daughter's generation needing two incomes and a deposit substantially bigger than the cost of our first house!

I don't get the mentality of saying that I cant save enough for a huge thing (deposit, uni,...) so no point in saving anything. And its not just the 3 quid, but lots of other little expenses (see above for the 20 quid a month on credit plus 30 quid for something else etc). It all adds up

Exactly. Three quid a day is hundreds of pounds a year and many people spend a lot more than that on lunch and coffee while at work.

The difference between the latest phone on a £40/50 a month contract and a cheaper, but still perfectly decent phone and a SIM only contract can be a grand a year or more.

It's little differences in spending choices like this that can make the difference between having savings and not. Over time, it can add up to having savings of tens of thousands of pounds and/or having money for bigger purchases like holidays or home improvements.

I don't understand people who buy lunch every day with the justification that £3 per day isn't enough to save so why bother. £3 per day saved by itself won't get you a house, or uni tuition. But actually, £3 per day is £1095 per year. Add a £2 coffee to that and it's £1825. That's a huge amount of savings per year just by cutting out buying lunch and coffee. Cut out new clothes, foreign holidays, PCP cars and takeaways for 5 years and that is actually a large amount of savings.

And as PP said, cut out the latest phone contracts. A sim only contract of £10 per month compared to getting the latest iPhone at £40 per month is another £360 per year. All adds up.

@Racoonworld

I don't understand people who buy lunch every day with the justification that £3 per day isn't enough to save so why bother. £3 per day saved by itself won't get you a house, or uni tuition. But actually, £3 per day is £1095 per year. Add a £2 coffee to that and it's £1825. That's a huge amount of savings per year just by cutting out buying lunch and coffee. Cut out new clothes, foreign holidays, PCP cars and takeaways for 5 years and that is actually a large amount of savings.

That’s exactly why I don’t buy takeaway coffees regularly; I do it perhaps once or twice every two months. I just don’t feel like I can afford it every day or even every week. I’d rather have the money in the bank and not have to think twice about it when it’s time for new glasses or taking the cat to the vet.

That’s not to say that my way is the “right” way, just that I hate the way regular expenses add up and you don’t even notice because they’re no longer ‘special’.