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 always worked hard and pretty much always had two jobs. But they dob’t pay much and my basic bills have been over half my monthly wages ( £1,300) I’ve had to buy and run a car out of what’s left ( no public transport here) and bring up a child. The honest truth is that if you live alone on a basic wage you’re going to have to borrow at some. point.

I buy everything secondhand or get it free and have always done so but done things cost. If there’s no free washing machine or oven when you need one you have to buy them. MoT’s, garage bills, keeping things maintained are big outlays and it’s impossible to save the hundreds required if it’s not coming in.

One piece of advice my nan always gave was save, and don't ever owe money where humanely possible. Easier said than done these days, but we try and live by that. Dh and I are abnormal in his circle in that he's a high earner but we just don't spend, we save and save and eat simply, no holidays for a number of years, he does tons of overtime (Or did, pre covid) to pay off the extensive training debts as fast as possible (Though it still took over 10 years just for those debts alone). It's a hard habit to break, and he and I are seen as "stingy" but to be honest when covid hit, many of his colleagues suddenly found themselves in dire straits because they lived lives to the financial hilt.

I see this all the time in my job. people tie up all their money in second homes to rent out then they get ill, can't work, can't get benefits as they have too much capital but all tied up in property and find themselves in a very difficult situation.

^^what do you do?

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

I just wonder how they can be arsed, but I think 'home decoration and styling' is a hobby to some people. They genuinely enjoy looking for new stuff, planning projects and doing/arranging the work.

Whereas I'd rather stick pins in my eyes and leave everything like this until it really can't wait any longer. We had an extension built and everyone was talking to be about how exciting it was that I could go and buy a load of shit from Ikea and have the planning appointments and I just hated every minute of it.

We've lived in this house 15 years and we've decorated (very simply) each of the rooms once and have no plans to do anything soon. The bathroom is probably from the 1980s but it's good quality but not to my taste, so I have no desire to undertake the messy and expensive project to upgrade it.

Based on recent history, if you treat life as a fun game, you'd be better off loading up on debt. I think if you are earning a good wage you should get yourself reasonably sorted in case of emergency and long term provision (pensions, life insurance, critical illness cover etc).

@wheresmymojo

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?

There's a balance to be struck, for sure. It depends on the size of your rainy day fund and what eventualities it covers. Out of work for a few months vis a vis out of work permanently through injury or illness makes a lot of difference. If you have kids you may want to leave them something. If you have a disabled child (we do) you might want a bigger cushion for them.

I think it's highly variable whatever your age, but there is probably a trend towards being more spendthrift/having higher expectations at a younger age, mainly due to social media.

I'm 30, and among my friends the vast majority live within their means - no debt beyond mortgages, sensible lifestyle, no flashy cars or showing off perfect homes/designer clothes etc. I do have a couple of friends who are the opposite though, they've just always been terrible with money and spend what they have every month, even though they are on incredibly high salaries. So I think a lot is down to personality and upbringing - they spent all their income carelessly even when we were students, then carried on doing it even when earning over £100k... but there's definitely the expectation that living in grotty places and a crappy lifestyle for more than a couple of years after uni is 'not fair' and a tempatation to get into debt to avoid this.

I think the biggest indicator of this trend is the disappearance of shared rooms in house shares - 30-40 years ago you wouldn't think twice about sharing a room with 2+ single beds in a big city as a student or young professional, now it's unheard of (I know because I've looked to see if they're available). Young people just won't consider them no matter how little they're paid.

I actually dont know.
I think I have been caught out both ways - thinking one or two people have more than they did have, and vice versa. So I made it a personal rule of mine a couple of years ago, to not assume either way.

@Divebar2021

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?

In our circle of 10 or so close friends we're open with each other about everything.

I think it's a bit of a weird mindset to have that one shouldn't talk about money. Why not?

I know what all of them earn and not for any weird reasons but because we talk about pensions, savings, our financial states and careers along with everything else in our lives.

It depends.

I think a rainy day fund is important but provided you're only borrowing a manageable amount, I don't see the problem in borrowing.

It would take us around a decade to save the budget we plan on for our kitchen extension. Or, we could increase the mortgage and enjoy the kitchen for ten extra years while paying it off.

Life is quite short.

@wheresmymojo

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 don't think it's miserly over-saver behaviour to have savings on hand to:

1. Replace major household appliances and have repair work done immediately
2. Buy a new car when old one bites the dust
3. Be able to live for 6m to 1yr while out of work (either lost job or ill)
4. Take time off work for other reasons (SAHP, sabbatical)
5. Have a decent standard of living in your old age and not fully reliant on state pension
6. Cover the costs of moving house (deposits, moving fees, etc)

Plus having a secure roof over your head, so either a paid-off mortgage or extra savings to pay rent.

I'm not saying you're financially incompetent if you don't have all that. Far from it! It's a lot to achieve! I don't think we've got quite that much yet and we save a lot! But we've been able to make some major changes in our lives (e.g. husband's career move and retraining) without blinking. I'd rather "miss out" on lots of flashy stuff and foreign holidays and be able to just nod and smile when we need to pay out £1000 in repairs without even thinking about the cost.

The stress of trying to save the money is miniscule in comparison to the peace of mind having savings and no debt has brought us.

I like to think that DH and I have found a balance.

We have a decent household income and both save into pensions and S&S ISAs. We also both have our own savings accounts where we keep about 3 months’ salary, but no more than that as we’d rather our savings earned us more money! We also have life/critical illness cover for extra peace of mind.

Other than that though, we do make the most of the money we have. And occasionally we won’t save much for a couple of months, and will instead put the cash towards a holiday or home improvements.

I’m a worrier so if we didn’t have any savings, I’d panic about it. BUT we’re both of the mindset that we don’t know how long we’ve got left on this Earth. I’ve seen too many people die young, and it’s made me want to have nice holidays and a home that I love being in. I’d hate to have sacrificed everything during my younger years for the sake of a huge pension pot that I’d never even use.

There was a book that was popular sometime back, at least in the US, called The Millionaire Nextdoor. It was about the many people who do live within their means and accumulate significant assets by doing so.

DH and I have always done this, have no mortgage or other debt and will retire with quite a lot in liquid assets.

We don’t have any savings but we live off of one wage as I am a carer, we could save but we’d end up living so frugally, our children don’t have much as it is and I wouldn’t want to take more from them, I always remind them they are luckier than most when they complain about no holidays or no fancy birthday parties etc we can’t afford those things, maybe when I’m able to get back to work this will be better for us as we’d love to buya house but that seems like a pipe dream.
We certainly have months when we are living paycheque to paycheque.

I think a lack of financial literacy plays a huge part. Understanding the importance of compound interest (both the interest you pay and receive) tax benefits etc.

People also don’t understand the difference between saving and investing. Comments like interest rates are poor so what’s the point in saving etc etc.

There’s not been much talk of retirement on here either, I’m investing for my retirement, as the state pension is minimal, my work pension is quite poor, no employer match, high fees and it hasn’t performed well over the past few years. Therefore if I didn’t invest another 10% or more then I will never be able to retire or I will struggle to pay the bills when I do.

It’s all well to say, ‘live for today’ but if you are lucky then 30 years of your life will be spent in retirement, who’s going to pay for that?

It's a choice many didn't need to make in the past. On the whole my parent's circle didn't live in debt, had savings etc but also didn't go without the things they wanted. Inflation has outpaced wage growth... even 15 years ago I could save AND buy the thing I wanted. Nowadays I have to make the choice between whether to save this month OR buy the thing I want.

I've tried to spend less save more especially over all 3 lockdowns.

It staggers me how much I have spent in the past (makeup, clothes etc) especially compared to SIL and to DM. Both don't like shopping though SIL does like clothes!

I think this will slow down as I age though because even though I pay into a decent-ish private pension I just won't have the disposable income I had when I was working - depending on when I can retire!

I remember a thread on here asking about savings, and quite a few posters said those saying they had savings and no debt must be lying.

I do think some people will never have enough money in their eyes, though. I used to work in finance, and many of the credit applications were from people earning very high 5/6 figure salaries. I remember one in particular got just shy of 6 figures as a quarterly bonus, yet they were still applying for a credit card hoping to get the highest amount possible. Most also had several other maxed out cards and loans.

We're in our thirties and have nearly a years salary (DHs, in a sahm) in savings that we don't touch, it's our safety net. We also have income protection insurance, critical illness cover, death in service benefits which cover us both and pay into pensions for us both (even though I currently don't work). Also have separate savings that we add to then use so the amount goes up and down for if we want to do home improvements/go on holiday etc. We also overpay our mortgage whenever we can (usually 8% per year atm) and only use credit cards to get points/cash back. We both use our credit cards for everything then clear them in full at the end of each month, we don't 'spend' from our bank account just bills come out of it and occasionally cash if we need it.

Not all 'young' (am I still young?) people don't know how to save or manage money! I won't have debt, except for our mortgage, unless it's a short interest free period that I know we have to money to clear as soon as the interest free period is up. We bought double glazing and new doors on interest free finance, because even though savings earn a pittance, something is better than nothing so we left the savings in our bank earring a few pounds until the time came to settle the balance.

I will say though, the majority of our friends use finance a lot. Cars (we drive 10 year old cars, not bothered about flashy ones) big tvs, holidays all go on credit. All bar one couple that I know well have mortgages but probably half of them borrow against them for things like new kitchens so they're not paying off they're increasing what they owe. The one couple that rent also live majorly on finance, have credit cards and catalogues coming out of their ears (even though they earn well) and will likely never be able to get a deposit for a house together because they're always paying things off first. I do worry for their future (it's a really close friend of mine) because they have no pensions either, I don't know how they're going to manage in 20 years time!

We save & do AVCs into pensions plus S&S but I don't really see the point in overpaying mortgage although we do have a low LTV

A neighbour sneered at us for never having what he called decent holidays,I replied if we don't have it, we don't spend it. He shrugged and said don't get it myself.

He also told me that equity in your home was there to fund your lifestyle.

This was early 2008, turned out when the balloon went up they were up to their necks in it, £60k on credit cards.

I refrained from pointing out that we were debt free.

I have every sympathy with people who are in debt, but no sympathy with people who try to make people who don't agree with them feel small.

@the80sweregreat ah... the good old days.
Years ago people tended to marry much younger, and after a period of time already living together. We married at 26 and already had bought our first flat and lived together a few years, so by the time we married we did have a lot of stuff. Our first flat though was a mix of new and second hand stuff.

I always use credit cards for holidays though due to the protection.

I’ve done a lot of growing up to get to a point where I’m not in debt and can save each month. I was an idiot twenty years ago, but a recent redundancy exercise at work gave me a good jolt to fully get myself in a better position should it ever happen.

What struck me recently was a long read on the BBC website with people being furloughed or made redundant, and being blindsided that any benefits they could receive would not cover all the monthly commitments they had signed up for, like car leases and gym memberships. Clearly an education issue?

We have always lived within our means. Both DH and I come from families where there wasn't a lot of money. DH especially, and he is obsessed with never being poor again.

We have only overdrawn out bank account once - by about £3 when we were first married. If we can't afford something we do without.

We have been fortunate with our jobs and are comfortable, so we spend our money on nice things, but aren't extravagant. We also save over three figures a month. We are approaching retirement and want to enjoy it.

As most of our friends are in our age bracket I would say that, in my experience, most people I know don't overspend, and do live within their means.