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 always think it’s a bit rich when the older generation berate the younger generation on their spending habits. I’m sure if we could afford a house on one wage we would. Most younger people are paying a large proportion of their income in rent, to members of the older generation, and it would take a lifetime to save up enough money for a deposit. Maybe if the older people weren’t fucking us over in rents we’d have something to save for?

Not only is the cost of living rising, work has become more precarious with zero hours contracts and platforms like Deliveroo and Uber which want to pretend they are not employers. This puts all the risk onto the worker - tough enough if you are a well paid consultant, incredibly difficult if you're on minimum wages - and the UK is a low wage/ low skill economy. Of course some people are high earning and feckless but many more are not

I see it across my friends too

We are millennials but definitely save more than we spend

We live in an expensive area of the country so even with ok salaries we wouldn’t get much luxury without overstretching ourselves

Friends who all have the new build executive homes splash the cash on iPads , holidays and lease cars,
We have a small terrace, second hand cars and holiday in the Uk.

We do however seem to have a slight addition to posh expensive wine and our food shop isn’t cheap

We are considering replacing one of the cars for a newer one now the car is 15 years old but even using £4K of savings means we still need to borrow a bit to cover the cost and we don’t know if we will feel more comfortable waiting longer, but it’s a balancing act as the longer we wait the more repairs our car needs

I also struggle when a bonus comes through (haven’t had that to worry about the past few years) but even with extra money thats unexpected I find it hard to treat myself

Sometimes I wish I wouldn’t find it hard and buy those nice shoes, or other

I'm not saying people should go back to this but not long ago it was very frowned upon to be in debt, certainly going bankrupt was a huge stigma, and had significant penalties. Now, I believe, other arrangements can be made(?)

People lived with parents when first married or lived in rooms of a big house with shared bathrooms etc.

The rise of being able to see footballers, celebrities etc etc, property shows and lifestyle magazines and the easy availability of credit has made people think "I should have that too!"

But, interest rates for savers are absolutely shit and so it's not attractive to save as it was 30 or so years ago.

I'm definitely risk averse and I've been brought up to always have savings "just in case". I don't have a massive salary but I live well comfortably within my means and I always save every month. I did have a small credit card debt a while ago but now it's paid off and I just keep it for emergencies.

My parents are immigrants to this country and have always had the mentality of "you must always be prepared in case of emergencies" so I have had it drilled into me since I was young. They're from a country that had massive upheaval during their lifetime and no "welfare state" to rely on, so saving for most people is the most common sense and sensible thing you can possibly ever do.

I'm really grateful that they instilled that into me because I'm definitely the kind of person who would have spent it all left to my own devices, especially when young! (cue teeny credit card debt)

We save for everything and we lived abroad for years and bought our first (very small house) outright and then worked our way up from there. I understand I'm very lucky, but I am of the kind that if I can't afford it, it doesn't happen

You can’t be seriously suggesting that everyone should be like you, and save up to buy somewhere to live outright?

“If I can’t afford it, it doesn’t happen”. Most would disagree when it comes to finding a place to live, I’m afraid!

Well, if we're doing anecdotes, my parents, now in their 70s, were rubbish with money. Never had quite enough, made poor financial decisions, splurged on holidays, buy mountains of crap they don't need etc.

My MIL was a double bankrupt, and my FIL has been bankrupt at last once and now lives purely on credit and will have to work until he dies, yet he keeps spending money like water and almost went to prison for tax avoidance.

I don't think it's a younger generation thing, more a personality thing.

FWIW, I live within my means and DH and I both work full time and save hard because we don't want to live like our parents!

I look at friends and relatives and think a lot are one extreme or the other. Saving a lot or being in huge debt. I think it's hardest for people to get a balance.

What you think doesn't matter, it's a matter of demonstrable fact that the cost of living has outstripped wage growth and wages have fallen in real terms over the last decades.
Decades? Is that your yardstick? Try going back a bit further. Physical "stuff" is cheap compared to 40/50/more years ago. As for buying "experiences" ... the concept didn't even exist!

there’s very little motivation for anyone to save money considering interest rates are so low

but it's not (just) about the return, it's about having money in the bank for a rainy day. I don't care (that much) about interest rates, but I like to know I've got a tidy sum in the bank to deal with buying a new car, gas boiler, or for a big 0 birthday holiday. If you stick £100 away every month you've got £1200 for a rainy day at end of the year (plus 50p interest!). If you spend it, you haven't. It would be nice if savings rates were 10% (or even 5%) but you can still accumulate.

I haven't watched it, but there's an interesting looking series on Netflix, Marriage or Mortgage which seems to be about choosing between a big wedding or a house deposit.

Surely when it's put to them like that, spending what could be a year's salary on one day seems like complete madness unless you're very well off?

I can see the attraction of buying things you need like furniture on credit when you aren't getting any interest on your savings, but it seems like complete madness to me to be buying non essentials, including a new sofa when you already have a functional one, on credit when you don't have much in the way of savings, because, even if it isn't earning any interest, you do need some money put by in case of job loss etc.

A lot of people can only just meet their bills (or are in debt) and don't have any extra left over to save. (This was me for many years, so I speak from experience.) Sometimes it's not about not wanting to save, it's about having nothing to save.

When I tried to buy a car with cash the salesperson said me oh that’s very old fashioned it’s what my nan would do! She said most sales are on finance now!

I said apart from housing.Some people spend their money as soon as they get paid and live from month to month even though they earn well. Things cost more ? What’s that got to do with not having savings? People do have the money to save but they choose to buy ‘more stuff’ . That’s my point.

I think it depends where you live to some degree. Houses can be twice as much in the south than the north so like for like jobs within the same company will still pay the same - only the people in the north have far less outgoings on rent/mortgage payments.

I thunk social media influences people’s decisions too with consumerism. Keeping up with the Jones’s of being seen to even if you’ve got debt up to your eye balls

I'm another who became an independent adult in the 80s and was on the very bones of my arse for over a decade.

Easy credit, reduced unit cost, increased consumerism has all made a huge difference to spending levels and lifestyle expectations.

We still save and pay cash whenever possible. The only difference in our attitude now is we have the ability, habit and income, to run credit cards sensibly.

I want to have something to show for my stress levels once I get fired / bail. So overpaying my mortgage and piling money into a pension are way more appealing to me than buying a new car or going on fancy holidays

Me too. I’m not going to disapprove of anyone choosing to do those things though. Discretionary spending keeps the economy moving. If somebody prioritises holidays and cars over pension contributions, that’s their choice as an adult. I won’t have much sympathy for anyone who does that then complains that their pension isn’t enough to live on though.

I am a saver but I am struggling to see the benefit?
All my debt riddled spending friends are doing fine - like the poster mustfly above...
So they don't own anything - but actually they don't care and does it matter if they do?
The world is being pushed to this - don't own anything and spend everything you earn.
Where is the downside to this? At the moment I can't see it.
So you don't maybe own your house - but so what - hit retirement and you will get a basic pension and not lose your savings to care bills...

I am starting to wonder whether I've got it wrong... ( I hope I haven't but I feel like I may have)

@puffinkoala

there’s very little motivation for anyone to save money considering interest rates are so low

but it's not (just) about the return, it's about having money in the bank for a rainy day. I don't care (that much) about interest rates, but I like to know I've got a tidy sum in the bank to deal with buying a new car, gas boiler, or for a big 0 birthday holiday. If you stick £100 away every month you've got £1200 for a rainy day at end of the year (plus 50p interest!). If you spend it, you haven't. It would be nice if savings rates were 10% (or even 5%) but you can still accumulate.

I agree with that but I think there's been a cultural change; if friends and family saved and got a return, building societies emphasised the % you could earn from your savings, it was attractive.

We are savers and always have been and have brought our children up to save for emergencies, avoid credit cards and loans except for cars. I could not cope with the stress of not having a cushion to fall back on although because interest rates are so bad we only keep an emergency cash account and the rest is invested.

The easy availability of cheap credit, the government policy of low interest rates and the normalising of high unsecured debt is to blame for peoples blase attitude to spending what they want and assuming their circumstances will never change. The high student debt amounts also contribute to the problem as does the high cost of housing in this country and childcare for young families. Wages not keeping up with inflation doesn't help. We helped our children buy properties and with Uni costs but I daresay there are many youngsters out there who get no help. Similarly the lack of financial education in this country is dreadful with people knowing little to nothing about compound interest rates, pensions or how to prepare a budget.

There's, maybe, a live for now attitude?

I'm only 30 so don't have much experience of the good old days, but I've read a lot of social history.

The prices of things are different, which makes the standard of living an average family can afford very different. For example, clothes are cheap so you can afford way more these days for the same money, but houses are expensive so buying in many areas is out of reach for people in their twenties. It's easy for older generations to look at what younger people have and criticise them for it, but it's possible to have a lot of tech (for example) for not much money.

That said, I think the availability of credit/debt is mad these days, and people use it for all sorts of stuff they really shouldn't. PayPal offered to let me pay for something in "X easy payments" the other day. It was a £5 kids sunhat on eBay! It's so easy to pay for things on credit, so easy to get more credit, and it's all totally anonymous. I don't have to slope down to the pawn shop to hand over my Sunday best suit to Dave in return for a few shillings and a disappointed tut. Click a few boxes and it's done.

So it becomes normal to buy everything on credit and pay it off later. Everyone's doing it, you don't even have to apply for a loan and prove its for something worthwhile. And then it escalates. People get involved in complex financial products and on the surface it seems fine but actually once they stop making repayments because they've lost their job or whatever it very quickly spirals out of control and they find out they're in big trouble. As long as they make the repayments everything's fine, but if the SHTF they're in a very precarious position.

People are used to thinking of credit cards as the same as debit cards, and therefore available credit the same as available money. Like the poster upthread who thinks house equity is the same as a rainy day fund. Except if the day is rainy, you might not have time to do all the paperwork before you need the cash, you might find banks aren't willing to lend you as much as you thought (because either you or they are by definition stretched)...

And when everyone has a student loan and a mortgage is everyone's goal, it just seems like any debt is normal. Also, our lives are very visible to others. We show them our homes and wardrobes every day, either in person or online - and see theirs too. Not just our immediate neighbours who we would expect to be in a similar financial situation, but people living on the other side of the country that we went to university with so they seem like our peers but they're living in Carlisle and were living in Camden - but we expect the same lifestyle.

I think it's the faceless ease of credit that is the biggest and scariest change. You don't have to look someone else in the eye and tell them what you want the money for. You just tick a box on an online checkout or fill in a two minute application online.

If you look at the ONS stats you will see that the last few years have seen lower savings rates than historical trends but not exceptionally so. One reason is that interest rates have been so low that saved money on deposit has actually lost value in real terms. www.ons.gov.uk/economy/grossdomesticproductgdp/timeseries/dgd8/ukea.

@Iamthewombat no my motto doesn't apply to housing needs obviously. I am aware we are very lucky to have been able to that. We didn't pay tax abroad for 3 years and that led to us being able to buy our house. My motto applies to holidays and household luxuries iyswim.

I HATE debt
Problem is I am with someone you describe who doesn’t live within his means
This causes so much arguments

To many champagne lifestyles with lemonade pockets