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AIBU?

AIBU to think most people have no idea how wealthy people live their lives?

1000 replies

AnneValentine · 28/01/2024 07:38

Just that really off the back of a lot of threads but most recently one where multiple people were adamant that the only way it’s possible to have no savings if you have salaries of £200k plus unless one of the couple is squirrelling savings.

Followed up with how do they pay for a broken down car with savings? Hasn’t even dawned on them that people on those salaries don’t have cars that are breaking down.

Is it so hard to believe that money literally eliminates money worries? That you can create a level of security that means savings and such aren’t needed?

OP posts:
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Am I being unreasonable?

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Gia79 · 28/01/2024 08:17

Your post doesn’t make a lot of sense tbh. Yeah, the very rich might not give a shit about a high interest high st savings account and excitedly check their few quid in interest building up each month, but they’ll value riskier but more lucrative investments instead, and have a load of assets. But they’re still ‘savings’. My DH scoffs at premium bonds and advises me to invest in low risk stuff rather than caring so much about a savings a/c building up relatively very very slowly. But of course shit can still hit the fan for the mega rich. A family business and empire can crumble, even a chief in tech or finance can get the sack. Even a property bought outright for millions costs a bomb to run. The private fees need paying every term and are increasing. Why do you think those Omaze house winners always have to sell up?

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Flatleak · 28/01/2024 08:17

Ok I'm going to try and at this as clearly as possible for the OP.

YOU'VE MADE UP YOUR OWN DEFINITION OF SAVINGS AND NO ONE KNOWS WHAT YOU'RE TALKING ABOUT.

HTH.

fyi savings is defined as any money leftover after your outgoings, including just for deferred consumption. So all your many many (fake) pounds in your current account at the end of the month - savings.

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CatherinedeBourgh · 28/01/2024 08:18

You just sound a bit disorganised and financially illiterate.

Investments can be savings, any sensible asset manager will keep a portion of investments in a form which is sufficiently liquid that it can be accessed at short notice. You never know when unexpected high expenses might come up that need dealing with, even for extremely wealthy individuals (I recently had to wire 150k for a wealthy person's aunt to have a particular operation abroad, which was completely unforeseen, for example).

Some banks will offer loans backed against the investments held in the bank, in which case the need for liquid assets is reduced.

But in all cases, access to liquid capital/capital that can be made liquid at short notice is a sensible thing to have, even for truly wealthy people (and I'm talking 7 figure incomes, not six).

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thecatsthecats · 28/01/2024 08:18

It's partly disposition though.

I'm not interested in most things you can buy with £13k a month, so sure as shit, I'd be saving.

I was talking to the in laws about the Set For Life competition. MIL was saying that she'd have a whale of a time on 5k a month and gladly give 2.5k each to her sons. FIL, the stingy git, in spite of having zero interest in expensive things, said he'd be keeping it to himself.

I do vaguely get your point though - when I was earning much much less than 13k a month, I'd just absorb surprise costs out of my monthly income. We've got a 5 year salary buffer saved between us, but we've yet to dip into savings for the sake of a big car repair etc.

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Riverlee · 28/01/2024 08:18

Rich people will have an emergency pot as well as investments. Being wealthy doesn’t make you financially irresponsible.

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HollyKnight · 28/01/2024 08:18

Not every "wealthy" person behaves that way, though. Many have outgoings which are pretty much equal to their income and therefore would struggle to afford an immediate large bill. You live well within your means and that's great. Not everyone does. And circumstances change. A surprise baby will have a huge impact on long-term finances. The sudden death of one party will have an impact in the short-term until insurance/death benefits pay out because if your lifestyle relies on two incomes, losing one will cause you trouble. Some people prefer not to take that risk and will save a buffer just in casr.

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DanaBarrettsKitchen · 28/01/2024 08:18

The real definition of wealthy is you don't have to work for your money and can live on passive income.

If you have to work just to stand still (pay the mortgage and living costs) then you're not wealthy. You're a high earner but not wealthy. You can have lots of equity in your house but the bank still owns a stake in it.

There was an interesting article ages ago comparing a wall street broker with a retired couple in Nebraska. The question was which one was wealthy. Turns out the retire couple were wealthier than the broker. They owned their home outright, no debt and had passive income. The broker had a very high level of debt that was entirely dependent on a wage to service.

Society has a skewed view of what wealth really is.

Also, high earners are very vulnerable to redundancy by virtue of the fact its easy to cut costs quickly by removing them. Seen it many times.

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TheaBrandt · 28/01/2024 08:19

They still have other worries just not financial ones. Dds best friends family is massively mind blowingly wealthy. Still have normal mum chats with the mum about concerns about teen friendships / behaviour, Middle East situation that affects their family and ailing parents.

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BillionaireTea · 28/01/2024 08:19

Seeing your note that you always have current account in profit, then yeah, that's your liquid savings. Nothing to write home about. You're just rich enough to not need to worry about interest.

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AnneValentine · 28/01/2024 08:20

macedoniann · 28/01/2024 08:05

I don't understand your point OP?

I mean, at the risk of sounding like a snob.
There's a difference between 'rich' and 'wealthy'.
What you are saying about the 'wealthy' not having savings is true.
They don't.
They have a lot of valuable assets (investments that you're referring to?) and in order to access liquid sums they borrow against these and pay the interest on a rolling basis. If they need to pay it off they simply sell some assets to fund it.

They don't have savings sitting in an ordinary bank account to be accessed is that what you mean?

Investments can go up or down but these people have so many, and portfolios constructed in such a way that the risk of it dropping heavily enough to impact daily spending is extremely low. Capital begets more capital.

FWIW '200K salary' is just 'rich'. It's not wealthy. Wealthy to me means not having to worry about money, losing your job or anything. Tech millionaires like Mitchell Hashimoto for example will never have to work again!

A 'high salary' isn't enough especially as 200K will be taxed to high heaven. Unless you invest very prudently, and earn that amount for a sustained period of time.

Edited

This is EXACTLY what I’m talking about.

And I agree re £200k - note I said upward - but don’t think we have had salaries like that coming in and have ended up without actual wealth behind us. All things that mean we don’t need savings in case the boiler breaks.

OP posts:
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TheaBrandt · 28/01/2024 08:21

This family are wealthy beyond salaries not sure either actually work. Both parents from separate families that each literally own big name conglomerates.

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renthead · 28/01/2024 08:21

So this is basically just about the fact that the OP doesn't have a separate, high interest savings account... to tell you the truth OP, neither do I at the moment. But I keep my chequing account balance very high so if we have a sudden expense, we can pay it.

I am not sure why that doesn't meet your definition of savings. Nothing about the money would magically change by being moved to a savings account (except I'd be getting a far better interest rate). There's no rule against saving in a chequing account...

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howaboutapartysong · 28/01/2024 08:21

Meadowfinch · 28/01/2024 08:05

Incidentally OP, I once collected my boss from the hard shoulder of the M3 where his new Bentley had broken down. Even cars that cost as much as a 3 bed house, break down on occasion.

You have a very odd view of 'how the wealthy live'.

My fils brand new fancy merc broke down because of something wrong with the electrics so stuff does happen to wealthy people

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Farwell · 28/01/2024 08:22

Money in your current account is secure money. Just not wisely invested money. If you do not end up with zero in your account (be it a savings account or just sitting in your current account) each month, you do have savings. And if you don't have something leftover on that kind of income, you are doing something wrong.

It is never a bright idea to spend every penny and have no cash available without liquidating assets, because the unexpected happens. Having enough money readily available to pay for the unexpected without worrying is the very definition of having savings, even if you have a complete obtuse way of describing it.

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WillYouPutYourCoatOn · 28/01/2024 08:22

AnneValentine · 28/01/2024 07:58

No they are not. Savings are money you can easily access in the case of an emergency. That’s not the case with pension or investments, neither of which can be accessed.

Oh dear OP.

And you're not wealthy. You have good salaries. But nothing to show for it.

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HollyKnight · 28/01/2024 08:23

Also, just because you don't move left over money in your account to a savings account doesn't mean it is not savings. That is exactly what it is. It is money you are saving rather than spending.

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AnneValentine · 28/01/2024 08:24

howaboutapartysong · 28/01/2024 08:21

My fils brand new fancy merc broke down because of something wrong with the electrics so stuff does happen to wealthy people

So what did he do? Assuming it’s covered by warranty? What costs were associated with his fancy car breaking down that would require access to savings for a rainy day?

OP posts:
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Potatodreams · 28/01/2024 08:25

Most wealthy people pay for everything on credit cards to manage cash flow. Nobody is going to be keeping the thousands and thousands for monthly spending in a current account. That just doesn’t happen. The wealthy don’t get their income paid into the bank in regular amounts each month.

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theduchessofspork · 28/01/2024 08:25

AnneValentine · 28/01/2024 08:13

We haven’t hit £0 in well over a decade. Cash sitting in your current account isn’t savings.

The irony that this thread is entirely proving my point is not lost.

Just poster after poster not understanding at all.

assets are not savings.

investments are not savings.

savings is your money, it’s secure money where there is no risk to it losing value. The same is not true for assets or investments.

OP if you want to start a useful thread explaining to those people who don’t understand that easily accessible savings are not the same as long term investments, then do that.

What you are doing on this thread is unpleasant - you are showing off to those who cannot imagine not needing savings to fix a boiler.

At the same time you are ignoring the people who are pointing out that your belief that people on 200k salaries aren’t often made redundant is crazy (C suite often first in line). Also that yes, people on such incomes do usually have savings because the expenses created by more assets (big old houses and kids being the most common) mean it makes life easier if you do, plus it’s part of good money management eg insurance is often a bad deal.

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AnneValentine · 28/01/2024 08:25

HollyKnight · 28/01/2024 08:23

Also, just because you don't move left over money in your account to a savings account doesn't mean it is not savings. That is exactly what it is. It is money you are saving rather than spending.

We aren’t saving it though. It’s just not been spent. It will be.

Are suggesting that people living month to month find £100 left in their account and that’s immediately considered to be savings?

OP posts:
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Ginmonkeyagain · 28/01/2024 08:26

Exactly. Like the OP I am lucky enough to have money left at the end of the month.

Being tidy minded and liking more interest, I tend to keep my current account lean and hoick the excess in to various savings pots.

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Ggttl · 28/01/2024 08:27

If you don’t spend as much as you earn then you have money in your account regardless of your income. I think everyone understands that. Some people keep it in their current account and some people transfer it to a savings account. You don’t transfer it. Is that what you are telling us?

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jhy · 28/01/2024 08:27

Those salaries but no cash in the bank? Meanwhile on other threads, single mothers are out there working, saving every penny to pay for their kids private education/uni fees etc

If your '7 figure house' is owned outright then that is an asset although it would be concerning if you are spending every single £ which hits your bank in that month. Technically you are still living pay check to pay check from what you've described.
Only if you downsized or sold your property then you'd have free cash to use in an emergency situation

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AnneValentine · 28/01/2024 08:27

Potatodreams · 28/01/2024 08:25

Most wealthy people pay for everything on credit cards to manage cash flow. Nobody is going to be keeping the thousands and thousands for monthly spending in a current account. That just doesn’t happen. The wealthy don’t get their income paid into the bank in regular amounts each month.

How do you think people on these kind of salaries get paid…? I mean sure there are some positions that aren’t but if you’re on £250000 salary how do you think they get paid?

OP posts:
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AnnaTortoiseshell · 28/01/2024 08:28

AnneValentine · 28/01/2024 08:13

We haven’t hit £0 in well over a decade. Cash sitting in your current account isn’t savings.

The irony that this thread is entirely proving my point is not lost.

Just poster after poster not understanding at all.

assets are not savings.

investments are not savings.

savings is your money, it’s secure money where there is no risk to it losing value. The same is not true for assets or investments.

This thread is amusing.

Can you define savings, then?

Savings isn’t money in your bank accounts. Not investments, nor assets, nor pensions.

You have no savings, no money you could access in an emergency, but you have money in your bank account, investments, assets, and pensions. To me that sounds like you have considerable savings.

In terms of emergencies, that would truly be an emergency and could happen to anyone: what would happen if one of you became ill or was in an accident and suddenly couldn’t work? Or if your child (if you have them) or other relative suddenly became very unwell and you had to stop work to care for them? Or your partner was convicted of fraud and went to prison? (I have known this happen and it caused a whole heap of problems).

I suspect, like anyone else who is fortunate enough to have them, you’d rely on the savings that you do clearly have…

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