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?

And yes, we got the maximum mortgage we could afford when our kids were tiny. Years later and DH’s income has risen significantly, I’ve gone back to work full time now the kids are older and we’re nearly out of the childcare years, it has really paid off.

There is a lot of holiday threads on here & people often talk about spending 10k annually on holidays. I don't know anyone in RL who does that, likewise everyone on here has mortgages of £300 or similar, whereas most people I know are paying 1.5k plus

I was brought up to spend within means and when I first bought my flat, my parents went through every last thing I'd now be financially responsible for.
I use the credit card but mainly to get the points as it's paid off in full. Our cars are both leased but that's because we can give them back instead of being forced to sell at knock down price (buyer can sense desperation in my opinion). We have rainy day funds for travel costs, house costs etc. This sort of thing comes in handy when the boiler breaks down on NYE / roof needs replacing ASAP

I do think more people live beyond their means now, possibly because credit seems so much easier to get.

Every time I login to my online banking there's pop ups offering me this loan or that loan, credit card, overdraft facilty. Same if I go in branch. I earn a decent wage but not mega bucks by any stretch.

Me and DH have absolutely no debt or credit what so ever. Even the house is paid for and we are relatively young. It's because we were very frugal early on (and DH before he met me as he is quite a bit older).

We are fortunate that we don't have to go without things but I would say we are much more careful with money than some people. Our cars are paid for -decent cars but not top of the range models. Same with phones -good but not the latest iphone.

I tend to buy clothes in sales a lot, for us and for DS.

We are very comfortable and have substantial savings now so I feel confident that whatever happens, we are ok.

For me, I think I need a rainy day fund/no debt as my parents were terrible with money when I was in my teens and it used to really worry me. I never wanted to feel like that as an adult.

I look at colleagues though who buy cars on finance, rent very expensive city centre apartments, buy takeout lunches every day and are not saving into pensions and they may seem to 'have it all' but I wonder what they will do if something unexpected crops up. I would never say anything though - not my business.

I seen a woman on my Facebook page the other week saying she was very stressed because she had fallen behind in rent to her housing association. Not even two weeks later she put photos up of her DDs birthday, latest iphone, expensive trainers amongst other presents. She also hired a hot tub for the weekend for her DDs friends to come over. yes during Covid times .

This honestly blows my mind. I'm sure her DD would have understood if she has said it would be a low key birthday without AS MANY gadgets and presents. Priorities have changed massively these days, not for the better.

Only loans we have ever had is mortgage and we use credit cards for convenience and protection, paying them off monthly. I really have no idea what friends do because we don't really talk finances with them.

There is a lot of holiday threads on here & people often talk about spending 10k annually on holidays. I don't know anyone in RL who does that, likewise everyone on here has mortgages of £300 or similar, whereas most people I know are paying 1.5k plus

Everyone on MN seems to know way more about their friends/families/neighbours finances than I do! What they earn/what they spend on mortgages/holidays etc.
I've never discussed with friends what we earn or how much our mortgage is. Although a lot of people I know must spend at least 10k/year on holidays because of the type/frequency of holiday they go on.

[quote toconclude]@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.[/quote]
Granted I read it years ago but that wasn’t what I got out of it at all.

I think credit cards are ok if you pay them off each month...however, if you have a credit card and you lose your job then what? I think that if they can be avoided then it's best to do that. Most 0% offers don't last forever.

A PP asked "what was the point In saving for a rainy day? Surely the last year has shown us that we need to be saving... the pandemic itself has been one long rainy day for a lot of ppl. I think those with savings and no debts are sitting pretty as such (and do they should be!)

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.

So glad I don’t know anyone that stupid and cheeky! I’ve never heard of any friends asking to borrow money from other friends like that.

If you have dc & you know whether your friends get child benefit or 30 free hours then it's not hard to work out rough incomes.

Interest rates on savings aren't exactly an incentive to save.

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

^^ I do wonder if it has turned any spenders to savers. I'm a saver, previously spent everything I had then landed in an awful situation. Mental health declined. Didn't have debt just didn't earn enough to cover basic living. That experience completely changed my attitude towards finances. Can't beat peace of mind having money behind you and no debt weighing you down.

One thing I don't understand is buying brand new furniture. I have treated myself to a couple of quality pieces but also found amazing stuff on Facebook Marketplace, antique stores, etc. The thought of spending £1000 on a new dining table when you could sand and stain a 2nd hand one is amazing to me!

THe 1980’s were a different world. 40 years ago. It’d be like comparing the 1940’s to the 1980’s.

Credit it cheap. Houses are not. Suddenly a £2k sofa bought interest free over 4 years looks like a drop in the ocean against an enormous mortgage.

I don’t generally want “stuff” and so am a saver almost by default.

I think lots of people live beyond their means and I’m surprised at how few of my friends understand their pensions or how mortgages work.

However, I think I’m about to join the (seemingly) living beyond my means crew because after saving £20k for a house deposit there’s no way I can buy anywhere because of the income multiplier.

So I might as well spend all of my disposable income on brunch and holidays for a few more years until my salary has improved! I want a watch that costs almost 2 grand and tbh I think I’m going to save up and get it because that’s a drop in the ocean of what I’ve saved so far.

If I only needed another 10 grand for a deposit I’d happily have no life for a year, but it’s more like 100 grand needed.

So I’ll be renting, have about £25k in the bank/investments and £2k on my wrist. Am I mad?

Yes, lots of people live beyond their means.
No, it is not the main reason people can't afford houses. The main reason people can't afford houses is extortionate house prices (although, pp is correct when they point out that a lot of people are just focusing on London/SE prices. If a 2 bed flat is costing you £350k, then a few years of frugality aren't going to give you a 10% deposit. If a 2 bed flat costs you 85k, like some near me do, then it's considerably more manageable, even accounting for lower wages).

I'm quite anxious about money, probably more than I need to be, and the only thing I haven't bought outright is my house. There is considerable difference between me and some of my colleagues in what we expect to spend and it really does add up. Someone upthread mentioned buying a dining room table for £1200 and paying it off in installments. Fine, if you've got the money to do it, knock yourself out.
Our table and chairs cost £75 as a set from Emmaus. It's a nice looking, not wobbly table big enough for our family and it's hard for me to see what the other £1125 could have bought me.

One of my best friends is a mortgage broker ( in the US, not the UK) and so she sees people's financial details in entirety regularly. Many of her clients are referrals so family friends, friend of friends, etc, she knows socially. She says so many of them haven't got two pennies to rub together and you would never guess it without seeing their finances. Multi million dollar houses, kids in private schools, high spec cars. But they live off their equity. Every so often they refinance to get the equity out. My friend has so many clients approaching retirement with no savings, house worth 3 or 5 million but the bank owns the entire thing.

@rollygolly

If you have dc & you know whether your friends get child benefit or 30 free hours then it's not hard to work out rough incomes.

I have no idea how my friends fund their childcare or whether they get child benefit. It’s not something we talk about. We have never been eligible for child benefit but I have never told anyone that.

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.

This is absolutely bonkers.

1. Don't lend money to friends except in case of dire emergency, and even then, it's better just to give rather than lend if you can.
2. Don't lend money for a deposit on a house! That's not supposed to come from a loan, it's a cash payment.
3. Why on earth is he buying an expensive house when he hasn't bothered to save a deposit?
4. How on earth does anyone have the chutzpah to ask friends to chip in for the deposit on their house?!!!!

Just no. Stop enabling this sort of entitled behaviour. People can save if they want to. Or buy a house they can actually afford, or not at all.

I'm extremely good with my pennies (lots of savings, no mortgage) even though I don't earn a lot, and I'm constantly surprised by people on much higher salaries (i.e. several multiples of mine) who never seem to have any money.

People expect too much nowadays IMHO. Social media has a lot to answer for there. They see luxurious lifestyles on the likes of Insta & want it all, & all at once - the mansion with extensive gardens, the stylish car(s), the dress-to-kill wardrobe, the 5* all-inclusive holidays. The costs of private/Steiner school type education for their kids. The home refurbishments that run into thousands. This is what they aspire to. All on salaries which can’t stretch that far.

For ppl on modest but fairly decent salaries maybe one of these things could be saved for & then enjoyed but the problem with a capitalist society is that it promotes unhealthy comparison, so ppl break themselves financially living lifestyles they can’t realistically afford.

And another thing.......ppl get confused about the difference between material gain & happiness. They think that by acquiring the Instagram treasures they see they will be happy. In fact, the reverse happens. The more they buy on finance, the more debt they wrack up on credit cards, the more stressed they become. “Money spends itself,” as they say

@TheOneWithTheBigNose i think the secrecy around money is quite an English thing & not really something I recognise in my circle but we are all 2nd gen immigrants. They don't have to be deep conversations, one friend is a SAHM & I told her to claim & payback CB for the pension credits.

TBH my whole social circle have been savers and everyone lives quite simply. I think we as children of immigrants do have that no debt attitude. However there are people we know who lead incredibly lavish lives, holidays, beautiful cars, even the teenage daughter has a brand new car. Grandparents declared bankrupt a few times. I don't begrudge them but i do wonder why we save at times when others are happy to be in so much debt. Im saving for my children really, to get them into great schools and help them with deposits.

plus with zoopla everyone knows what you paid for your house 😆