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

[AnneValentine]

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?

We have a high income and alternative income streams. We keep 20-30k in our joint account for cashflow reasons and the rest gets chucked elsewhere, we don’t call this our emergency savings or anything, it’s just there and has been useful. I consider this reasonable planning, it’s not so much money that there is an opportunity cost to having it in a bog standard account but it’s enough to be a decent contingency. But I grew up skint so maybe I’m not as gung-ho about it.

Yes we are lucky enough to not have to worry much but I would consider it a bit silly to not have easy access cash, for example if our health insurance doesn’t cover something expensive but important, I would pay cash. Also echoing private school fees and trips etc. I don’t bother insuring any household stuff either, by the time you meed to use it you’ve already paid out the cost of just replacing it, bit pointless imo.

My parents have worked hard and made savvy investments, as well as having bank savings. My ex, one morning, looked at his computer and had made $48m over breakfast. That's someone who doesn't need an ISA. Not someone on £250k salary who is completely dependent on that monthly payment and spends it all

Yes- now this, is definitely wealthy 😉good for them!

Yes this is how we do things too -

Don't spend everything we earn so there's always something extra in the current account

Which we use to spend on occasional expenses like home repairs or holidays

I consider these "savings we are planning to spend"

If there's more than a certain amount in the current account, I invest it

If necessary, I could access most of our stocks and shares investments within 48 hours

I don't have a separate emergency fund - because I don't think we need it, but I still consider us to have savings - day to day savings we are planning to spend within the year, and long term investments we could access if we needed to

Savings you can access are just another term for liquid assets

Savings that are locked away are non-liquid assets.

both are important.

i think the OP use of the word savings has completely derailed this whole thread. It certainly flummoxed me!

I understand that you contribute to national services - as you should. That isn’t my point.

If the NHS was a perfect system and served everyone equally and on time, with good after care and follow ups then I’d agree with you. As it is, the system is broken and there aren’t enough resources to serve the people needing them. You could voluntarily lighten the load, but you choose not to. It’s a different choice to the choices I make, that’s for sure.

It was fine? Why? I had just put my first flat on the market if I recall the years correctly.

This thread is ridiculous.

You haven't needed savings yet.

I disagree. They get better payouts but if they don’t perform they get the heave go more readily than average workers.

@AnneValentine you don't sound financial literate - of course investments are a form of savings.

And yes, people usual have investments which range in liquidity, so if they need to access cash they will have some saving they can liquidate quickly (certain equity), while others may be inaccessible (investment in private company or pension) or some may be accessible with a penalty (certain savings that need to be sold first) or after a period (fixed-term bond)

@LadyLucksalot you do know cash in a bank account also can go up and down? That's what inflation does. The challenge is investing the money somewhere to beat inflation.

@AnneValentine a wealthy person I knew would say insurance is "a tax for the poor". Genuinely wealthy people don't waste money giving it to insurance companies each month on the off chance a dishwasher breaks. They just fix the dishwasher when that's needed.

We have a share dealing account, you just transfer the shares back to cash when you need them. Of course investments are savings.

I don’t where it is not reasonable to expect it. Aggressive cancer for example. For miscarriage treatment, neuroma removal and other we use our healthcare. The question that I answered was asking specifically how would I pay for treatment my healthcare won’t cover. The answer is I would use an NHS hospital. Why shouldn’t I? Are you expecting my to save hundreds of thousands of pounds to cover treatment that is only offered by the NHS…? Come off it.

Really? Did I imagine the Lehman Brothers collapse?

I work in wealth management. You should always have 6 months worth of expenditure held in easily available bank accounts. That’s in case of life emergencies that may and do happen. Believe me, almost all the wealthy people I see have this. Plus a lot in ISAs, pensions and other investments. Don’t be a nitwit. It’s basic financial sense isn’t it?

Some of my investments are instantly accessible some aren’t. I have one account with tens of thousands in which is all in a stock market fund. But I can ring up and sell x amount of shares instantly. I wouldn’t call it a savings account, it goes up and down with the stock market. Potential risk of losing it all.

OP how would you deal with these situations without " savings"?

1. book a £20k holiday

2. pay your self assessment tax bill (say £30k assuming most is covered by paye)

3. pay £6k for an op to save your dogs life after it's run over by a car?

4. gift £100k to a child for a house deposit

God, this thread is dull 😄 - it mostly seems to be about the meaning of the word savings (which is an umbrella term that includes investments), and someone refusing to accept that the ability to access 3 to 12 months of expenses might actually be a good idea.

Then you liquidate some of your assets or investments as the more "liquid" end of the scales

What a bizarre thread

We have a household income of much the same Op and have plenty of savings (as well as investments).

It is sensible to have some easily accessible savings which don't have a penalty for withdrawal.

We want to do some work to the house soon and that will be paid for from savings - it would be a total waste of money to cash in investments to pay for it, or pay the mortgage interest on borrowing.

Haha of course pensions and investments are savings. I don’t have a cash account, the returns are appalling unless you keep moving it round. In dire emergency I’d use my credit card until I could transfer out of stocks and shares ISA.

OP, by savings you mean a pot of cash.
Because anything that earns interest is an investment.
My investments are spread over a broad range of products, some of which are more easily accessible than others.
You are right in that some unexpected bills can be funded from income.
Even insurance claims can require a hefty excess, as I discovered when I scraped my car the other day.
However for big-ticket items, we will draw down from our investments.
And the idea that high earners aren't at risk of redundancy is the stupidest thing I think I've read in a very long time. In some professions the risk is extremely high, e.g. finance, tech, where M&A often leads to redundancies.

You seem to have a very narrow definition of savings OP. Pension and investments are a form of savings, to my way of thinking. They certainly ease financial worries.

I know some very rich people, but it's mainly old, moneyed wealth. Some of them are farming families. Others are peers. They quite definitely have savings, including investments and also savings accounts. They're pretty savvy with money, that's how they've kept hold of it.

I've certainly name changed for this! Op - if you're paying a mortgage and relying on employment to bring in a monthly income that you need to carry on your lifestyle - you aren't really wealthy in my opinion. Wealth is knowing that if you were never able to work again you wouldn't have to worry. Knowing that the rug couldn't suddenly be pulled from under you by an unexpected occurence at work.
For the last 5 years I've been fortunate enough to become wealthy. Honestly, I thank the stars every day. Being wealthy for me is about peace of mind, being able to help others, but most of all freedom - do what we like, when we like, and no credit, loans or mortgages.
There's no need to think about 'savings' , but I consider any money that isn't sitting in my current account to spend is saved in some way. It's stashed in multiple 'layers' with different levels of access. I don't leave piles of money sitting in a current account doing nothing. I don't know why you're banging on about savings being different to investments - if you haven't spent £20 at the end of the month, or £20k - it's money you saved. Wherever you put it it's not been spent. Even savings accounts pay interest, so they are a form of low-level investment.
Oh, and sometimes our cars break down. But we have other cars. 😂
I'll have to namechange again I guess, because MN hates posts like this. All I can say is that I know what it is to live in poverty as well, to have nowhere to live and no income. That's why I am so grateful for now, and like to 'invest' in helping others in various ways.

You're talking semantics OP. Most people are just using 'savings' as short hand for their financial cushion, so if an unexpected change occurred, whether that be a broken boiler or the incapacity of the earner and loss of their income, they'd manage. The point that the nature of the cushion will vary dependent on level of wealth, and may be anything from £500 in a savings account to a portfolio of assets, is surely so obvious it barely warrants a mention?

Why would it be a waste of money to cash in investments? How is the money wasted if you got higher returns on your money?