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 feel like a lot of people we know must know something we don’t, as I’ve no idea how they afford it all. I suspect they either have parents to fund them or are mortgaged to the hilt/in other debt.

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).

My DH bought a house in the 1980s when he was 21, and had a low paid job. All the next generation down have far better jobs (our DC are still at school but his 20-something nieces and nephews) and some earn more than DH ever has but are still nowhere near getting on the property ladder.

My parents bought their house in the 1980s - its fairly bog standard semi - when my Ddad was on average wages and my DM was a SAHM. Houses in the same street (suburbia, not a posh area) are 600k ish now. ...20 times the average salary...

[quote rollygolly]@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. [/quote]
It’s not secrecy, I’m just not particularly interested in how anyone else funds their life. And obviously no one is interested in how I fund mine as they’ve never asked! If a friend needed financial support or advice I’d be happy to help.
If people care enough about what I paid for my house to look on zoopla, all they know is what my house cost. They don’t know how much deposit I put down, how much my mortgage is, whether I have a mortgage at all...

No I would say the opposite really.

Most people I know have far less credit than people the same age did in the 1990s. Far more common to have savings than credit.

I also think that as home ownership is so unattainable for young people on average salaries where I live (SE) there is less incentive to save and so why not spend it?

If the past two years has taught me anything it is to enjoy each day as a precious gift. I won't be getting into debt, but I will worry less about what I am spending

Yanbu

I know so many people who have huge incomes (eg household income of 200k plus) and just fritter all of it.

Whilst we do make use of a credit card and have cars of lease (for ease, etc) we still live within our means, and we still make significant savings into accounts, investments and pensions. We do spend a reasonable amount on things like holidays and other luxury spends i]compared to others, but we don't spend what we cant afford.

I know so many people who have huge incomes (eg household income of 200k plus) and just fritter all of it.

I don't think I know anyone on that kind of income.

We had to live quite frugally when we first moved in together as I was still at Uni and only had a part time job.

But I'm glad we had that experience, as it taught us a lot. But I'm also glad we didn't have DS then as that would be hard - to not give him what he wants.

We do have savings, I would be worried if we didn't. And I don't throw stuff away until it's completely end of life. DH keeps trying to buy a new toaster - but I won't let him as the one we got as a moving in present in 1998 still works!

DS was also frustrated that I wouldn't buy a new TV until the old one broke down. He wanted a flat screen one but the old one worked so I wasn't prepared to buy a new one. He's now going on about a smart TV but already knows the answer!

I don't know anyone that buys sofas every 2 years, but I do have friends that buy lots of stuff just because a new one comes out.

It’s not secrecy, I’m just not particularly interested in how anyone else funds their life. And obviously no one is interested in how I fund mine as they’ve never asked! If a friend needed financial support or advice I’d be happy to help.

It's not about particular interest, it's just conversation no different to talking about anything else eg we are upping pension contributions to get under the 100k threshold or because we don't get the 30 hours it's cheaper to get a nanny, any recommendations, etc.

If people care enough about what I paid for my house to look on zoopla, all they know is what my house cost. They don’t know how much deposit I put down, how much my mortgage is, whether I have a mortgage at all...

Well I was being facetious but that's my point, my close friends are I discuss mortgages, we don't have a problem with it.

I will be honest though: I find people who sit judging other people’s spending really, unbelievably boring, smug and not particularly nice people.

I don’t know the financial details of all of my friends lives: I could hazard a guess though. But their spending doesn’t impact me in the slightest.

We are a bit in the middle: no debts, some savings, but I do spend too much on stuff that we don’t need and really should reign it in a wee bit so that we can save for a deposit for our sons first flat.

There used to be a stigma attached to being in debt, but now living on credit has become normalised.

All my friends have cars on PCP, massive credit cards balances and loans etc.

I live more sensibly and have a 9 year old car I own outright (still works fine so why get a new one). I love a bargain too and have saved thousands of pounds over the years buying second hand items that are just as good as new ones. It means that despite appearances I’m better off than my friends, with savings in the bank rather than debts. I also own my home whereas they all rent.

Each to their own I suppose!

@Mustfly

Honestly, I find people who are obsessed with not having debt to be the crazy ones. Especially when they look at debt as a moral failing. I bought a dining table the other month for £1200. Will pay it back at 0 per cent interest free for £30 a month for the next few years. Same with the sofa, 40 pounds a month for the next three years. I got exactly what I wanted, brand new, for 70 pounds a month and as we make £85,000 a year between us, we'll barely notice it. We would have had to take a good chunk out of our savings to buy both outright and frankly I'd rather keep the money in the bank. Car finance...meh. Even a reliable second hand car will cost thousands so sometimes a lease car makes perfect sense. I don't have a car on finance at the moment but ours is 10 years old so if it blows up, we'd have to. I've put holidays on credit cards loads of times and paid them back over several months. All this saving for a rainy day seems crazy to me. We took the kids on the most wonderful holiday to Greece in 2919...5 star resort, all inclusive, it took us a good few months to pay it off, but imagine if we'd booked it for 2020 and saved? Seize the day, use credit wisely, live life to the full! I find it so sad when people are refusing to treat themselves so they can keep thousands in the bank...that's what seems wasteful to me. Money should be a tool for improving your life, not a security blanket.

This. Exactly. I’d rather have experiences and to enjoy life than be on my death bed and tell my daughter, oh we never went any holidays etc but have this rainy day fund (which would probably have been used to pay for my care anyway)

I work in public sector so have a very secure job, great pension, haven’t mortgaged myself up
To eyeballs even though I could. So using a credit card to pay for a holiday etc Is no big deal.

If covid has shown is anything it’s that life can be taken away from us at any point so enjoy it while you can.

I’d rather have a life than a rainy day fund.

@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?

The way I see it if I have savings I feel more secure, knowing i have a buffer if the worst happens. And if the worst never happens (god forbid!) then at least I'll have some money in my old age, like a PP said it would be hell living in abject poverty in your old age and what is the point of having worked for years and years only to end up poor & old when you might need it most? It's good to spend & have fun when young but I think it's stupid to spend ALL of it.

I do like to spend though, mostly on travel and clothes, but I put aside something every month. I think it's just about balance.

We all die and can't take anything with us but while I'm still alive I plan to be wise with what I have. None of use know what's in store for us. I'm not married and I don't have kids, the likelihood of me being old and having no one else to rely on is real.

*To clarify, this is only for those that are able to put aside some savings, obviously many people do not have a choice, especially the way things are at the moment.

I think it's unlikely anyone, friends included, would tell you the truth about their finances, possibly because they are also lying to themselves, or at least lack financial self-awareness.

I do know that in the past year, despite our family income remaining the same, we have saved not a single penny. It turns out we live pretty frugally, as we spend next to nothing on coffees, meals out, entertainment, and all the otherleisure activities that have been shut. That's normal for us, but I have been gobsmacked how much other people spend on that stuff.

DS was also frustrated that I wouldn't buy a new TV until the old one broke down. He wanted a flat screen one but the old one worked so I wasn't prepared to buy a new one

Ha ha yes I was the same. I still have suspicions that DH and DS conspired to break the TV so we could buy one with a bigger screen

What I don't understand is why seeing how people lost their jobs, couldn't feed their kids, and depended on others they don't think having some savings is a good idea. Just because you only pay 50 a month for your new sofa for 10 years isn't a guarantee that your have that money for the next 10 years. Sure live for today but things change in a heartbeat as we all know.

Money should be a tool for improving your life, not a security blanket

Yes it should. But what happens if you lose your job and are up to the eyeballs in debt? I suppose if savings outweigh debt you'll be ok, but what if they don't?

As for savings needing to be more than a rainy day fund, I guess you only understand that if you have ever lost your job. Some companies are fairly generous with payouts but others do their utmost to cut you off with the bare minimum.

DH and I spend a lot but we have a savings pot of between at least 5k at any time. We are at the young family stage so dealing with unpaid maternity leave, childcare costs, me working part time...etc.

This is my assessment of my generation;

18-21: Uni/shit job. credit card/store card debt to have a good time and dress well! Leave it mum I know what I’m doing!!!

21-25: Shit/relativity junior job. Lives at home or in a grotty house share. Socialising and social media is everything, YOLO, more debt to go on holidays, buy a car and keep up with our friends. No savings- time for that later I’m ‘finding myself’!

25-30: Semi decent job. Probs should start thinking about a relationship. Friends got married. Goes on a few dates. Not that fussed though. Still living at home/house share. Probably should try to save now but ‘I work hard I deserve to treat myself!’ Immediately spends all money on tat/travel/keeping up with debt accrued so far. Congratulates self for not taking on more debt.

30-35: Meets partner. Rents shitty flat and decorates it on dedicated Instagram account. Announces engagement. Wow weddings are expensive. WOW houses are REALLY expensive.
But we don’t have 30k saved we just have debt each! ‘The state of this country is disgusting!’ Bank of mum and dad?!?!

35-40: Announces pregnancy. Takes growing bump pics for Instagram. Drowning in debt/giant mortgage/ car loans. What do you mean childcare is expensive? ‘The state of this country is disgusting. How are normal families supposed to manage?’

I get what you mean, i can sometimes feel the pressure to have a nicer car, expensive clothes and shoes, better holidays that a lot of people in similar circumstances seem to have. Home interior too- I know lots of people (and also see it on the Facebook groups for home decor tips) who will change everything inc furniture frequently to fit in with trends. Fashion seems so fast moving nowadays.

I honestly am one of those people who spends what they get. I spend it on my kids to give them special holidays/experiences. I didn't have these growing up. I'm not in a position to buy my own home due to my circumstances and likely won't for several years so I'm in an over priced private rental house which I hate but I can't do anything about it until I have pass my degree and get a job (single parent) so I do spend every penny on my children. I could, of course, be saving that to buy in the distant future but by then the kids will be practically grown and will have missed out on what I'm trying to provide now.

I just would rather be living rather than surviving and enjoying the here and now. I/we've been without any money (even less than now) and know we can adapt if the worst happens.

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

Because a rainy day could last for weeks, months, years....if you were to get cancer realistically you might need a year or more off work. You might need less or not much time off at all. But if it is a long haul for you, you are going to have to continue to pay the mortgage (if you have one) and cover your normal living costs. You can get critical illness insurance but if you don't have that, then having 6 to 12 months basic costs in savings is going to be very helpful. Ditto you get knocked down by a bus and can't work for a few months. Or your child comes down with something and you need to take time out to care for them. Sure, benefits will help, but having some savings means it takes that much longer for you to get into serious trouble meaning you are able to concerntrate on recovery rather than worrying about losing your home or being able to eat well on top of everything else.

As for long term savings, the more you have in the bank when you reach that critical stage of needing care yourself, the more options you have open to you. The more money you can chuck at it, the better service you are likely to receive. That can make a real difference not only to you as the person requiring care but to your family who will want to know that you are receiving the best possible care. If you've ever had to have a look around care homes, the difference between
good and adequate is enormous.

We are living longer and really do need to ensure that we have enough tucked away for a long and relatively health retirement. Many of us are failing (myself included) on this point. It is not great getting to 50 and realising you don't have much of a pension and that it's going to be nothing at all if you live to 80+. Savings can supplement pensions or even buy more pension years as you advance towards retirement age.

There is every point to savings and lots of them! Unfortunately, we do seem to be caught in living for now and not the future and that's worrying for a lot of us.

We have insurance for the vast majority of events that could befall us... critical illness, death, redundancy etc.

@fizbosshoes

*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).*

My DH bought a house in the 1980s when he was 21, and had a low paid job. All the next generation down have far better jobs (our DC are still at school but his 20-something nieces and nephews) and some earn more than DH ever has but are still nowhere near getting on the property ladder.

My parents bought their house in the 1980s - its fairly bog standard semi - when my Ddad was on average wages and my DM was a SAHM. Houses in the same street (suburbia, not a posh area) are 600k ish now. ...20 times the average salary...

I know. I know prices are extortionate, I know they've risen massively. But they've not risen the same everywhere. There are standard 2/3 bed semis near where I am for about £150k. There are also some for about £450k. I'm not sure who's buying the latter because, while they're nicer than the others, they aren't £300ksworth nicer.

All I'm saying is that, while prices have risen rapidly, it's wrong to say that the entire country's have risen to the extent London's have.

I think people with savings can be really quiet about it. I have savings, investments and pay into a pension. No one other than DH knows the figures. I won't be having those who spent all their money setting their eyes on mine when a rainy day comes.