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 been stuffing my pension with 40k per year whilst the going is good and they haven’t adjusted the tax relief status. They might in the future so I’m making hay while the sun shines.

And yeah - I reiterate. It makes a lot of sense imho for people in benefits to stuff their pensions too, because it actually increases your benefit entitlement! You lose around 25-27p per pound net - maybe even less depending on circs, for anything up to £1.138 in the pension!

I think that the so-called MC are simply living on credit cards and from paycheck to paycheck.

Credit card "privilege" and lack of self control have a lot to answer for perceived riches, material things and secret debt of many so-called MC people in our country.

One job or financial issue away from ruin, the lot!

"I prefer to go home and have a coffee there, rather than fork out nearly £20 for 4 cups of coffee!"

That's because you're paying for a whole family though. A coffee for one is more affordable even if many, many times more expensive than making your own. But you're not paying for the coffee, you're paying for the venue, the service, the crockery, all the overheads, etc. I see it as paying for an experience and for a chance to relax somewhere that is not my own home. Something I really miss in lockdown. Also, for those living in small spaces, being able to sit down somewhere else is important.

Yeah I’m lucky I’d never buy a coffee outside, even if I was a billionaire. Well, maybe one of those 90p ones in a styrofoam cup at a car boot sale. I prefer instant anyway.

It doesn’t matter if something is affordable to me, it’s whether it offers value. If it does, than I think you should do it though so don’t think it’s a bad thing to treat yourself.

Bingo! People, other people, never oneself, aren't saving because of buying coffees (foreign holidays, Sky, hair and nail treatment, 'latest' phone . . . ).

@TulisaIsBrill

And yeah - I reiterate. It makes a lot of sense imho for people in benefits to stuff their pensions too, because it actually increases your benefit entitlement! You lose around 25-27p per pound net - maybe even less depending on circs, for anything up to £1.138 in the pension!

Yes, but if you're on benefits you don't have spare money to put in your pension, do you?

"Yeah I’m lucky I’d never buy a coffee outside, even if I was a billionaire. Well, maybe one of those 90p ones in a styrofoam cup at a car boot sale. I prefer instant anyway."

What happens if you go on holiday or days out with friends? It can be pretty miserable being with someone who won't do simple things to enjoy life even when they can afford it.

‘Yes, but if you're on benefits you don't have spare money to put in your pension, do you?’

Depends on your circumstances and how you cut your cloth? Like I say, if you’re only losing 25p in the pound net, it’s only on the very finest of margins that you might not be able to put any in.

@Gwenhwyfar

"Yeah I’m lucky I’d never buy a coffee outside, even if I was a billionaire. Well, maybe one of those 90p ones in a styrofoam cup at a car boot sale. I prefer instant anyway."

What happens if you go on holiday or days out with friends? It can be pretty miserable being with someone who won't do simple things to enjoy life even when they can afford it.

I find that people think it’s eccentric. I’m quite happy to accompany them to the shop, restaurant etc. I’ll spend (a lot) of money on a good meal if it offers an experience. A £4 latte from Starbucks isn’t an experience though, it’s a bloody rip off.

Point is notional cost is immaterial to me. If something is good value I’ll buy it whether it’s 5p or 50k.

Actually I did have a sip of a chai latte from Starbucks the other day and have to admit it was pretty good.

I think there’s a lot of speculation on this thread about other people’s financial situations. On the outside it probably looks like we are up to our eyeballs in debt and don’t save anything at all. We’re a young couple, 25 and 30, and both have professional jobs that were working our way up in. People would probs work out our income to be jointly between £50-60k p.a. Which would be correct from our salaries. But we have multiple other streams of income that make our household income more like 5x that. We spend a lot on luxuries but we also save a lot and invest a lot.

You have no idea what’s going on in peoples financial lives unless you sit down for several hours and go through everything with them which would just be a bit odd!

We are very comfortable but we are also tight when we want to be. None of our friends are. They’re constantly redecorating, getting new cars, going on holiday when they can’t afford to, ALL in debt for things like clothes. I just can’t understand it.

My house hasn’t been painted in 5 years (well looked after), had my car for 8 years, my husband has an old banger (despite being the main earner). We have approximately 30k surplus every year which we get we are blessed to have but that’s because we don’t spunk it. We still have a life, we eat out (pre covid), go on holidays, days out, buy whatever we want in terms of clothes and food etc. We don’t have to even think about how we will afford it. But we just refuse to spend money because we are trying to ‘keep up’ with everyone else or buy a new car because ‘this one is 3 years old now’. We don’t have any loans, credit cards are paid off in full every month.

The joke? Everyone moans about how theyre broke / in debt / can’t afford that day trip / their friends all have more money than them. Can’t help some people.

@TulisaIsBrill

Point is notional cost is immaterial to me. If something is good value I’ll buy it whether it’s 5p or 50k.

Yes, but you're not thinking that when you buy a coffee you're paying for the experience. If it's a nice place, it's worth the money. I just find holidays with compulsory picnic lunches because someone won't spend to be totally miserable. Tight people can be in the pain in the arse, even if they're willing to spend lots of money on other things, actually especially if they are.

Within my circle most are not high earners. We all live within our means as far as possible (no loans, credit cards etc) but some save more than others - although we don't talk about it often so I don't know all the ins and outs of all my friends' money.

" None of our friends are. They’re constantly redecorating, getting new cars, going on holiday when they can’t afford to, ALL in debt for things like clothes. I just can’t understand it."

Just shows you how different groups of friends can be. As far as I know, none of my friends are in debt except those who own a house and haven't finished paying the mortgage yet.

But we have multiple other streams of income that make our household income more like 5x that. We spend a lot on luxuries but we also save a lot and invest a lot.

Most people don't have that luxury.

Can I pick up on the point above about pensions and benefits? I’m on disability and fortunate enough to be able to save a few pounds each week, but I know there is a limit on how much I can have in savings (£6000 last I checked) before I lose benefits. I guess I’d assumed that would include pensions. If that’s not the case, is it worth me starting one and how on earth would I do that??

I don't much care how other people spend their money. But I would be prepared to bet that A LOT of the YOLO types, borrowing and spending like crazy on clothes, cars and holidays, and not building up any significant personal wealth, will be a lot of the same people complaining that their children can't afford university education or to get on the housing ladder.

Like it or not, the economy works better for those who consider their wealth as multi-generational. My saving priority is to provide a high level of support to my children first, then worry about early retirement second.

@ZaraW

But we have multiple other streams of income that make our household income more like 5x that. We spend a lot on luxuries but we also save a lot and invest a lot.

Most people don't have that luxury.

You don’t have to tell me that. I grew up on a notorious council estate and my parents asked me to leave home at 16 with nowhere to go. I’ve had some very tough times indeed where there was a choice between heating and food. Times where I’ve slept in bus shelters as a teen. Again people shouldn’t make assumptions.

@ColdTattyWaitingForSummer

Can I pick up on the point above about pensions and benefits? I’m on disability and fortunate enough to be able to save a few pounds each week, but I know there is a limit on how much I can have in savings (£6000 last I checked) before I lose benefits. I guess I’d assumed that would include pensions. If that’s not the case, is it worth me starting one and how on earth would I do that??

@ColdTattyWaitingForSummer

payments into the pension come off your income, and anything in it are not counted as savings (things become a bit different if you’re over retirement age when they can say you have notional income). Indeed, it’s the best place imho to put anything over 6k so you don’t get your benefit income tapered.

If you work, join whatever scheme they have. If you don’t, look into opening a cheap SIPP (self invested personal pension).

“Yes, but you're not thinking that when you buy a coffee you're paying for the experience. If it's a nice place, it's worth the money.
I just find holidays with compulsory picnic lunches because someone won't spend to be totally miserable. Tight people can be in the pain in the arse, even if they're willing to spend lots of money on other things, actually especially if they are.“

I don’t think you got my point. I will spend anything with friends if it’s an experience I think worthwhile - a decent meal, a trip to a spa, whatever. But To me, coffee isn’t! In my first post I said if it is worth it to you, go for it 👍

@ColdTattyWaitingForSummer This seems to suggest you can, but I would ask this question on the money board, MSE Forum, Meaningful Money Facebook group for a proper answer.

www.onlinemoneyadvisor.co.uk/pensions/personal-pensions/personal-pension-benefits/

Sickofthesoapbox12 you have done well for yourself. What are the extra income sources?