To think most people I know live anove their means?

[PrincessBananaH]

I just came across a statement that really got me thinking which is that, essentially, you should always live below your means in order to be financially secure. It’s a pretty simple statement but I don’t think many of us follow this in life. Most people I know are trying to keep up with the Jones, stretching their mortgages to almost unafforable amounts to buy bigger houses instead of being happy in a modest home, going on lots of holidays and dinners out etc.
I am trying hard to save currently and with lots of family expenses and childcare I often think we’d be better off living below our means in the future years to keep building more financial stability, however I find it hard when everyone around us is trying to “have it all”.
AIBU to think most people don’t want to live below their means?

I think one issue can be where one person in a couple becomes very much that way (didn't start off like that) and the other person goes along with it to 'keep the peace' - I've certainly experienced this.

Agreed.

Everyone I know lives within their means.

I slightly struggle to understand how you don't do this...
You surely have to repay it at some point....?

You can't just take out debt and never repay it if you want to have any sort of decent life

I own a small 3 bed house and I love it. I'm forever being told by friends that it's time to upgrade.

I'm almost mortgage free, I have a private garden, I have savings and disposable income and can retire when I'm 60.

^

Honestly, who's winning here?

Most people I know are trying to keep up with the Jones, stretching their mortgages to almost unafforable amounts to buy bigger houses instead of being happy in a modest home,

many have to stretch to buy a flat which is still cheaper then rent…And many who stretched in the days of 90% mortgages have done very well with house price growth.

@fonfusedm yes but those days are now gone. House prices at still at their highest and so are interest rates. Salaries haven't matched that and inflation is also high so you can't compare today's buyers with those who bought a property even just 10-15 years ago, it's another world

i don't do finance/credit but i live to my means.

i have too many horses and too many cars but i wouldnt change anything.

@PrincessBananaH my point was younger people have no choice but to stretch for a property. And it’s very often cheaper then renting

A lot of people have family money behind them too.

We live within our means, and we are not well off so those means aren't huge!

I don't disagree with short term borrowing for something necessary (car) that you can comfortably afford the repayments on but borrowing for holidays/ flash good is silly IMO. As is basically renting a car, sure you can keep trading in for the newest one but you will never, ever own it.

YANBU - people want the best life they can have, even if that means they take unreasonable risks.

I have two separate friends who have just got on the property ladder. Their mortgages are the maximum they could get for the maximum term. And lasts two years. Their careers (Civil Service) are unlikely to advance much in the next few years before their mortgage deals expires - chances of them moving up the next grade when they've only just become G7 is v. unlikely IMO.

One of them can't even afford to commute into the office twice a week anymore ffs. They have no savings. They live pay check to pay check. One of them (not the one who can't even commute twice a week into London) just had to take out a loan from their parents because the boiler on their new house has died and they didn't have any savings to get it fixed. They are 100% banking on mortgage rates going down in the next two years. Gods know what they will do if mortgage rates don't go down tbh.

They could both have gotten smaller properties but didn't. Mind boggling.

The issue with people my age (mid 30s) is that we had absolutely 0 financial education and then graduated into a financial crisis.

I find that a really strange comment because which generation do you think did have 'financial education'? Schools don't sit kids down and tell them that it's not a good idea to take out loans and get into debt.

I'm also mid 30's but I think it's just something that you sort of educate yourself on as you become an adult, ideally with a bit of parental guidance if you are lucky to have that.

A financial crisis doesn't make it easier, but people have responsibility here - it's blindingly obvious that if you spend more than you earn you are going to have problems. You don't have to be a genius or of a certain generation to know that.

The issue with our generation is more entitlement (we've always been used to having a rather privileged life, having never experienced war and being children of the 'baby boomer' generation), and this laissez-faire 'it will all be OK in the end' attitude (which again - is a product of the life our generation has experienced).

I was raised by very financially savvy parents and as a result I've never had any debt - DH was the same. We both live below our means.

To answer OP's question - most people I know live within their means - but I think there is something about the circles you move in and perhaps even somewhat of a class issue (disclaimer: not exclusively, of course - anyone can be in debt).

But for example my friends are mostly well educated, middle class, sensible, and none of them that I know of are in debt or living beyond their means.

A lot of my family, on the other hand, are very much working class and for the most part not wealthy. A few of them are in huge debt but still can't resist buying an unnecessary new living room suite if they can get approved for finance. Some of them own things I would never dream of buying, brand new expensive cars etc., despite having minimum wage/ part-time jobs and no savings.

It is interesting how people have such different approaches and ideas about money and debt. To them it's just something to worry about another day/ a problem for the future.

How do you know that everyone you see buying nice houses and taking holidays is actually living above their means? Sometimes I complain about the cost of things and say no to stuff I feel is too expensive, but that’s because our budget is based off of what is left in our accounts after our pre-decided (hefty) saving/investing deductions. We aren’t actually broke when I say I don’t have money to do something, I just don’t have any money left in that particular budget line I’d set for myself for that month. Most of our circle do the same.

We live below our means, but it does take some intentionality. We decide in advance what we want to be saving and investing from our monthly income, and then we ensure that actually happens by automating savings and investments to come out immediately so that we never see the money just sitting in our accounts. We also don’t use credit cards that allow us to carry a balance from one month to the next. We make sure we have the money to do what is important to us (travel is a big one for us) and we don’t spend much on things we don’t care about (like cars).

Have always lived within my means, but parents lived through WW2 and were of a generation that repaired things, saved for what they wanted and when necessary did without and the attitude of saving for what you wanted was instilled in me as a child. I have never had any debt, but I benefitted from a free university eduction and received a full grant.

I live massively under my means at the moment because I’m saving huge sums for planned future expenses.

I live in a house that cost about 1 years pre tax earnings which I saved up for and paid cash.

I now save at least £5k every month towards school fees for my DC who will start in a couple of years.

Other than my work colleagues and DH there is nobody else who has a clue how much I earn. Most other people living in road and locally probably earn about 1/5th of my salary yet many of them spend far more than I do on holidays, cars etc.

When DC starts private school I suspect the neighbours will assume it is funded by GP or inheritance when in fact nothing could be further from the truth.

Me and DP live below our means. Prefer having no debt to a bigger house, so we're still in a fairly small house, have one car which is a little runaround.

It means at 40 we have no mortgage on either our house or the rental property we own. We have enough money to save a decent amount and have a few nice holidays a year.

The company I worked for imploded a few months ago, and I've not had a redundancy as a result. Given our outgoings are so low it's mean I've not had to worry about it till now (and I'm starting a new job next week)

I honestly don't understand why I'd want to buy a bigger house, and get myself trapped into debt again. We're comfortable, stress free (financially and in working life at least), and I never have to think "Can I afford this night out", despite the fact I don't earn that much really.

I don't judge anyone who does want more, and I appreciate that lots of people aren't as lucky as us, but it works for us.

Every time we get a pay rise or my DH earns OT, we put the extra away. We have the same out goings as we did in 2016 but we earn almost 50% more.

In my social circle, I think most people live within their means or below it.
However where I live I'm fairly certain a lot of people live well above their means.
I live in a part of the country where there's a lot of "blingy" people and there are genuinely quite a lot of people with lots and lots of cash. However, that seems to have a knock on effect to people with "normal" jobs.
For example, I know what quite a lot of my neighbours do for a living. And because I know what they do/where they work I can make a decent stab at their salaries. And those salaries are not the sort of salaries that typically support driving a brand new BMW 8 series or having multiple holidays a year.
Of course, it's impossible to know if someone really is living above their means - I'm not their accountant. Perhaps they've got hugely lucrative side hustles, or won the lottery, or have inheritance or a private income. But given the debt profile of a lot of Britons, I think it's safe to assume that many of them have everything on tick.
That's not a lifestyle I'd choose; I'm far too boring and risk averse. But it's their life and if they're happy to live like that then it's nothing to do with me!

The idea that this happens more typically in the UK is peak MN. Everything is terrible here, we get it🙄

Debt is endemic in almost every economy in the world.

This "doing well with house price growth" is a chimera. It's the same house with the same or increased running costs, just a fancier price tag. Until the mortgage is paid off that makes little difference. I would like to reply to all the "ooh, you house owner are all so well off" with "yes, I'm sure I will be able to pay my heating bill with a few bricks or roof tiles, what with all the wealth my house price increase has brought"

I think on the whole that people are bad with money.

We are good with money and just don't do stuff if we can't afford it. In the past, if we needed something, we'd have gone without til we saved up for it. Now we have savings to dip into for unexpected things.

Neither of us are materialistic and have a nice house, but don't want to stretch to a bigger one. Same with the cars...there's nothing wrong with the ones we have.

A lot depends on how you're brought up as well I think. Credit was a dirty word in our house and aside from the mortgage, we've never had any debt at all.

In my circle I think it's definitely true to some extent. I see people who I know earn about the same as us but they seem to be able to afford fancier cars and bigger houses etc and I don't know how unless they stretch themselves. We have a good chunk of savings and our mortgage will be gone within the next few years. But we don't have car repayments etc. I'm happy that we can afford nice days out and we never worry if the boiler breaks etc. We are fairly comfortable but not high earners by any stretch.

I agree with you , my DH is risk averse and we live massively under ours . We don't have any debt and nothing on credit .

Most people have cars on loans and other personal debt plus mortgages or rent .
Most people I know are out of money all the time though 🤦‍♀️

I agree that lots of people probably borrow money when it would be more prudent to not spend, or just save up, but I disagree vehemently that it's about keeping up with the joneses.

I think it's more the fact that there are so many exciting experiences, things to buy, places to live and people want to spend money on things that bring them pleasure.

I don't know a single person who worries about what other people have when they're considering what house/car to buy, or where to go on holiday etc.