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?

Which do you think is more common and which do you think results in higher debt?

I’m sure someone that way inclined can have a root round the internet for this info, but it doesn’t seem like what the OP was getting at in their post.

Definitely agree that the advent of student loans has been huge in people's thinking.

I'm 31 and my husband and I definitely live within our means. Our joint income is £50,000 no dependents. We have a mortgage but chose to only borrow what we could afford if one of us couldn't work which means we have a modest house. We have a good level of savings, our wedding was a small one (cost £5k), we could've used savings to spend more but it felt wasteful. We save every month and never get anything on credit - we save until we can afford it. I am disabled and have lived on benefits prior to working so I really appreciate money and I'm mindful that things can change quickly with health etc so I think its important to save where you can. The idea of putting stuff on credit that you don't need makes me panic. I think social media has altered reality for a lot of people.

I also think it's important to remember that most 25 yr olds aren't buying new shiny homes & having new sofas every yr.

I do not understand people who do not save(unless you really cannot manage to), especially if you are a homeowner. As you age so does your home, and Ive found when things go wrong in your home it's usually going to cost a few hundred pounds to fix. Perhaps I'm just unlucky but it never seems to be anything small. When you are young, you could perhaps get a 2nd job, when you are older and depending on health, not so easy. Everyone should save. For me, abject poverty in older age does not appeal. Ive got acquaintances who live the rockstar lifestyle, pets worth thousands, fancy holidays,big cars,lovely homes but then would complain about fuel bills etc. They also didn't save for emergencies, but would then expect family or friends to bail them out,which I think is a cheek. Im sure I read somewhere that everyone should have, at the least, three months salary saved. Regarding'keeping up with the Jones' the blame for that lies firmly with the box in the corner, that convinces everyone they ' need' the latest this or that.

I'm in my late 30's and I have never had a debt or a credit card
Thats great, although there is nothing wrong with having debt or a credit card, as long as they are manageable. Very few people could buy a house outright and a mortgage is a "debt", but as long as you can afford the repayments each month that's not a problem.
I have a credit card and pay it off in full each month. This card earns me cashback and improves my credit score. Theres nothing inherently bad about credit as long as its affordable to you and you don't rely on it too heavily.

Most people I know live within their means. I don't know anyone who buys a new sofa every few years or goes on expensive holidays or buys lots on klarna and things like that.

I'm not sure lack of savings interest will significantly change people's spending habits.

People who are always chasing the latest or shiniest X, Y or Z are unlikely to be persuaded by 'if I leave a grand in my savings account for a year, the bank will give me £50 reward' any more than a saver is going to think 'If I leave a grand in a savings account for a year I'll only get a few quid in interest' because the spender doesn't really think about saving and the saver will worry about job loss etc and keep their money as much as possible.

@Whatisthisfuckery

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?

Blame in the wrong place I’m afraid.

If you want to understand what’s been going on in the UK, have a read of “Affluenza” ISBN 978-0091900113.

This was an epidemic long before Covid.

How would you know what all your friends are doing? Other than the 2 specific examples you’ve given do you actually ask your friends how they afford things? I’ve maybe had one conversation with a friend when we’ve discussed our financial arrangements but otherwise I have no idea if people are paying with credit or not. I don’t even know what my friends earn. Why would it even be discussed?

@IDreamOfLogCabins

I'm not sure, maybe depends on personality type / how risk adverse people are / how influenced by social media etc.

I'd say of friends I'm close enough to know these things, are a fairly equal split between those that live within their means and those that don't. Even within my immediate family there are very different approaches.

Same. Most of our friends are thrifty, but DSis (in her defence, she knows this and is trying to change, a bit) spends money like water - constantly clothes shopping, redecorates regulalry, high end sporty car on finance, young adult kids get new iPhones every year etc. She's not struggling but spends almost all her (good) income. We could spend a lot more than we do but we don't care about fashion, cars or changing the house much.

the amount of credit people have or the top ups from the state that allow people to make choices outside their means

there's always someone ready to benefit bash, eh?

The 'top up from the state' mean that my children and I can afford to live whilst I work full time on very average wages. And yes, that includes maintaining our home, decorating, buying furniture etc. etc. etc. Without the top up we would struggle with every day living, let alone being able to buy anything (second hand or otherwise) when essential items wear out or are no longer serviceable. No doubt someone will be along soon to tell me that I don't really need a washing machine and should shower in cold water...

We've never lived beyond our means, never had credit for anything and took the smallest mortgage we could.
We were brought up that having to have credit was shameful, you kept it quiet. Now, most people seem to live by the month with dd's for a luxurious lifestyle they can't afford.
Have always saved too, it's priorities that's important, not what you earn.

'Annual income 20 pounds, annual expenditure 19 [pounds] 19 [shillings] and six [pence], result happiness. Annual income 20 pounds, annual expenditure 20 pounds ought and six, result misery.

I'm not sure it's a generational thing. Some people just have a saver mentality. I have two student children, and they are both very carefully indeed with money.

I've also known plenty of high earners who are my age, who spend all their money and have no savings. When you can still work, that's fine. But as you get older, it's much harder to be motivated to keep working, even if you are capable of it!

No point having a savings account now is there - you might as well put it under the mattress.
I don't think the people I know live like you describe though OP and I actually know a few who live simply and presumably have lots and lots of savings.
Personally, I'm not extravagant at all, but have so far found it impossible to have a very simple life. For example, every time I'm unemployed (only for a couple of months at a time) I've continued substituting my spending with savings so that I can have a life similar to before so I still go and sit in a cafe, buy the odd magazine, etc. I just can't do the sit at home drinking tap water thing. Well, I couldn't until lockdown!

YANBU. I'm far from frugal and enjoy the finer things in life but would never get into debt for it and I save every week no matter how small the amount.

I was agog when my sister and her husband were buying their first house in their mid 30's and asked family for help with the deposit. They had both worked in very well paid, professional jobs for more than a decade and had zero savings after living it up on a champagne lifestyle - travelling the world and going on countless holidays a year.

I was so pissed off with them as they went begging not only to his parents (who are retired) but also to my mum who earns minimum wage and doesn't even own her own home after my father screwed her over in their divorce. So incredibly cheeky and irresponsible. I don't know if they ever paid them back, I don't want to know as I'll be too cross if they didn't!

@jillandhersprite

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)

It will matter to your friends who have nothing but debt if they lose their job or get ill and very soon they may be pushed into homelessness and have to deal with the stress of making debt repayments on a pittance and have to make choices about whether to heat their house or buy food. I am a board guide on Money saving expert debt free wannabe pages and believe me the numbers of people who are in significant debt and regret it when circumstances change is high. No holiday or luxury car is worth risking the roof over someone's head surely?

If you own your house in retirement you have security and are not at the whim of some greedy landlord. If you have to use a basic state pension to pay rent you will have a miserable retirement and no choice as to what happens to you in old age. If you own your property or have savings at least you have a say in what happens to you and where you live.

I don't think you have it wrong unless you are saving everything and not living for today too. Governments want us spending to prop up the economy which is why interest rates are so poor and there is no incentive to save beyond the security it gives people. As in anything I think a balance of both spending and saving for the future is the way to go but in no circumstances do I think that spending beyond your means so that you are still paying for things you bought years ago is ok. Debt is borrowing from your future self.

@swimlyn

Hmm. Beware Affluenza's "women need to stay at home and care for their kids and if they don't they are just materialistic and unloving" message. No surprise, it's written by a man.

At the very least your savings account keeps your money safe from burglars and house fires. Plus pays a small amount of interest or if you have premium bonds, you can still have a good chance of up to a few hundred pounds a year with average luck.

Even if interest rates go to properly zero, it's still worth using a savings account unless you're trying to hide your money from someone.

I would be sick with worry if I was spending all I earn. The Covid crisis has surely demonstrated the importance of having something to fall back onto. No-one is 100% protected from a change of circumstances

It appals me to read here that people rip out perfectly good kitchens, bathrooms and carpets every time they move. It’s so incredibly wasteful.

We’re replacing our kitchen next year and I feel guilty about it because it’s not falling apart, despite being 21 years old.

So I'm one of 'those people' and I've changed in that I'd like to build up a rainy day fund.

But to be honest, I don't get the need for lots of savings beyond a rainy day fund....?

What are they for?

You only get one short life and you can't take money with you when it ends.

Isn't it a bit of a waste of a life to be sitting on a lot of savings while skipping experiences that you could be having with it?

I'm getting divorced and the only reason we had money is because I squirrelled it away without him knowing (I am sharing it!) he thought we had no savings and was fine with that

YANBU.

Ever since the late noughties credit crunch it's been government policy to encourage everyone to borrow and spend in order to prop up the economy.

I think your spending behaviour becomes normalised very quickly. We started to over pay on our mortgage and it became normal to us and so we made choices to over pay as much as we could. The result was that we paid off our mortgage at 42. We have friends who have openly resented our position but don't see that we made choices not to spend money on other things. They want a new car every 3 years but we had to choose not to change our cars so often to be in the position we are in.

Now we are firmly rooted in behaviour that means we save a set amount each month but always try to save more so we can save to buy something we need. We wouldn't take on a loan now at all.

I feel very fortunate but know that we don't owe any money to anyone for anything.

" I don’t even know what my friends earn. Why would it even be discussed?"

You don't have to discuss it to know (approximately) how much people earn. Public sector salaries are public and other professions you can have an idea. Then people often mention if they've inherited, but of course there could still be money from other sources.