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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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Bubbleohseven · 28/01/2024 08:28

My line of work means that I work closely with rich people in their homes. Two things have struck me about them.

  1. The food. It's very good quality. The best you can get really.
  2. The lack of stress. They TRULY understand that if you throw money at a problem, it goes away.
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donotsubscribe · 28/01/2024 08:28

I have no idea what point of view you have OP or what point you’re trying to make here.

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WillYouPutYourCoatOn · 28/01/2024 08:28

AnneValentine · 28/01/2024 08:27

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?

You get paid like this OP.

Wealthy people don't.

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Saschka · 28/01/2024 08:29

Loads of people I knew on that kind of income got made redundant during the last financial crisis (one literally worked for Lehman Brothers). I think all of them are well aware they could easily be sacked or laid off.

And obviously these people have savings!

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Catza · 28/01/2024 08:29

I don’t think YOU know how wealthy people live. I have two examples in my immediate circle. A couple with their own business taking over 500k in profit a year, plus shares and property portfolio. They absolutely have savings and constantly worry about their business (which they almost lost during the lockdown).
Another example is my partner who up until lockdown was clearing 250k a year from his business. Our brand new expensive car breaks on average three times a year. The warranty ran out this year and it has been in a garage for 4 months now so he is using my old car worth 3k. He has no savings and when his business took a hit 2 years ago, he had to sell the house and we now live relatively frugally while he builds it back up.
Unless wealth is generational, wealthy people do worry and do need savings.

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macedoniann · 28/01/2024 08:30

AnneValentine · 28/01/2024 08:20

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.

Edited

OK well, then YANBU, based solely on your title, most people don't understand the concept of not having access to ready cash.
But I can understand that, because for the ordinary Joe, the risk and cost involved in liquidating financial assets for emergencies is too high. The wealthy have people to do all that for them.

But the rest of this thread has devolved into a garbled discussion of the meaning of 'savings' - semantics. Accusations of you showing off and... discussion about cars breaking down? Discussions of spending more than you earn?


I get your point but I don't think you come across very well. Also, the level of wealth needed for this is beyond the level considered 'wealthy' by the general public.

The terminology used in the industry : HNWI and UHNWI. And the most important part the assets required for this definition must be highly liquid (cash and investible assets).

A PP mentioned someone with a business profit of 500K but that's not going to count if all of it belongs to the business and not the individual depending on how it's structured. Property etc etc not counted.

It's 1 mill liquid assets for HNWI and 30 mill for UHNWI.

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HollyKnight · 28/01/2024 08:30

AnneValentine · 28/01/2024 08:25

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?

Yes, you are. If you're not spending it, you're keeping it. I move leftover money into a separate account because it has a better interest rate. I could easily leave it in my current account if I wanted to. It is the same money whether it is in a current account or a savings account.

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squeakybanana · 28/01/2024 08:30

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

This. I wouldnt consider someone living pay check to pay check and who has no savings at all to be "wealthy". I just wouldn't. Sure, their incomings might be high but if their outgoings are too then it's no different from someone on min wage living pay check to pay check. It would only take a job loss for everything to come crashing down. Its not wise.

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Potatodreams · 28/01/2024 08:30

AnneValentine · 28/01/2024 08:27

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?

To be truly wealthy you won’t get most of your income in salary. It will be dividends or bonus payments etc. Y

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AnneValentine · 28/01/2024 08:30

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

We could in theory cash out investments but that’s not fast. Or access debt for an emergency, bar the mortgage debt is limited and managed. But I don’t know what kind of emergency would need us to do that and as yet all I’ve had is boiler - covered by warranty and we have insurance / service plan for all appliances - or cars, one leased one covered by warranty so there’s no cost their either. Anything else we’ve had to pay that’s unexpected we have just paid with money that’s come in that month.

OP posts:
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Holly60 · 28/01/2024 08:30

This reply has been deleted

Message deleted by MNHQ. Here's a link to our Talk Guidelines.

This!

And to be honest if someone has NO savings (including investments, properties owned outright etc) I'd consider them as Precarious Income no matter what their actual take home salary.

The reason for this is that unless you have capital, you are only a pay check or so away from losing everything.

If your income is £13, 000 a month but at the end of that month you've spent £13,000 and you have no savings AT ALL, you are as poor at the end of the month as the poorest person who also has nothing at the end of the month.

The fact that you rely on someone else to give you another £13,000 at the beginning of the next month puts you in a precarious position.

Very few wealthy people have NO savings at all. And if they don't, I'd not consider them wealthy at all, if at the end of the month they don't have a penny to their name.

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shivawn · 28/01/2024 08:30

I don’t think the OP really has any idea about what most people do with their money. Most make it work as hard as possible, especially on a high income, the way the OP manages theirs sounds inefficient, maybe a financial advisor would help?

I wouldn't normally endorse financial advisors but yeah might be a good idea in this case.

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Ginmonkeyagain · 28/01/2024 08:31

Wealthy people do not get paid a monthly salary. You have confused high earner with wealthy. HTH.

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Gia79 · 28/01/2024 08:31

I can’t be the only one confused and a bit bewildered at having read ‘savings’ hundreds of times now? Too much wine. One thing is for sure and that’s the truly rich/wealthy/insert synonym don’t spend their Sunday on Mumsnet quibbling over the differences- they’re prob on their way to breakfast in a hotel in Mayfair or something. Happy Sunday all. I’m off to er, make my own breakfast. sigh

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squeakybanana · 28/01/2024 08:31

If your income is £13, 000 a month but at the end of that month you've spent £13,000 and you have no savings AT ALL, you are as poor at the end of the month as the poorest person who also has nothing at the end of the month

Exactly.

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AnneValentine · 28/01/2024 08:33

Potatodreams · 28/01/2024 08:30

To be truly wealthy you won’t get most of your income in salary. It will be dividends or bonus payments etc. Y

The £250k is the salary. That’s why in the op I said upward. The £250k is guaranteed. The bonus is variable as are returns on investments so neither have been included as a given. The £250k is received monthly as a salary. The rest is not.

OP posts:
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BarbieDangerous · 28/01/2024 08:33

I don’t quite understand why you’d have so much money coming in and not even put £500 in a savings account each month? You say, ‘well if you have 13,000 coming in each month then why would you need to have savings?’ But why wouldn’t you?

You say people on these salaries aren’t the type to be made redundant, but you really cannot see into the future. You buy things that have warranty attached or insurance will cover it, okay great. Do you not want a safety net to fall back on just in case?

My definition of wealthy is very different to yours. I would expect a wealthy person to have an amazing pension, investments (possibly), a great carer with a very high income and a substantial amount saved. You never know what you may need money for and at least you can dip your hand into your savings account.

But I’m not wealthy, just a commoner so you probably don’t want my opinion anyway!

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AnnaTortoiseshell · 28/01/2024 08:34

Also, FWIW I have a close relative who earns £40k a month and she has plenty of savings. She doesn’t have to worry about money at all, but she is a fairly normal person who doesn’t have outgoings anywhere like her income. She doesn’t spend it all so it just automatically becomes savings. I would say she probably isn’t the most financially literate but she absolutely has money behind her if she ever were to need it.

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AnneValentine · 28/01/2024 08:34

squeakybanana · 28/01/2024 08:31

If your income is £13, 000 a month but at the end of that month you've spent £13,000 and you have no savings AT ALL, you are as poor at the end of the month as the poorest person who also has nothing at the end of the month

Exactly.

I did say that we never hit £0.

also part of that money is being invested each month. It’s just not going into a savings account or benchmarked as “savings”.

OP posts:
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Holly60 · 28/01/2024 08:35

We could in theory cash out investments but that’s not fast. Or access debt for an emergency, bar the mortgage debt is limited and managed. But I don’t know what kind of emergency would need us to do that and as yet all I’ve had is boiler - covered by warranty and we have insurance / service plan for all appliances - or cars, one leased one covered by warranty so there’s no cost their either. Anything else we’ve had to pay that’s unexpected we have just paid with money that’s come in that month.

OP you aren't describing savings here, you are describing an 'emergencies fund 'in an easily accessible current account.

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mikado1 · 28/01/2024 08:35

I don't think you're realising how badly you're coming across OP. Money certainly doesn't equal class...

Oh and my almost 20yo car has never once broken down!

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Ginmonkeyagain · 28/01/2024 08:35

LOL at the fact you consider yourself wealthy but have domestic appliance service plans!

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Auntieobem · 28/01/2024 08:35

I think I am one of the few who gets what op is talking about. To take it to a non mega rich level. I don't need savings to cover a new washing machine - I could buy one from money in my current account from my monthly salary. I don't need to worry about e.g. a big vet bill because I have insurance. But I do need savings to cover anything over about £6k (new car?). OP is describing the mega rich equivalent. Don't need immediately accessible saving because current account can cover all costs.

And I guess if things really went tits up they could liquidise assets (so in non mega rich example if things went tits up for us we could sell house and get the equity from that - but the equity isn't 'savings')

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Holypricks · 28/01/2024 08:35

Holypricks · 28/01/2024 08:14

Of course it is.

Investment ISA’s are fully accessible. Maybe not great to be a forced seller, but it’s totally accessible and would be deemed as ‘savings’ despite the assets being non cash.

Furthermore a GIA is accessible, 5 days max.

You would always have some liquidity beyond this, whatever your income. Maybe not lots of cash, but our current account will always have excess in it.

Makes me wonder if you do indeed have these things OP, you’re not very informed on the mechanics.

I notice you haven’t answered my points OP

As a HNW adviser, you don’t seem very well informed, unlike my clients…

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HollyKnight · 28/01/2024 08:36

Look at it from a UC/benefits point of view. It doesn't matter if you have £13k sitting in a current account or in a savings account. If you have unspent money in any account, it is viewed as savings. That is the law/government's stand on it.

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