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?

Currently we are living below our means, 40 years old, zero debt, one car, small modest house, no mortgage, savings, fairly moderate household income (especially by MN standards), 1 child in nursery and a moggy.

DH is especially brilliant at saving and we hammered overpayments of debt/mortgage before having a kid when I earned a bit more too. I've also learnt to cut my cloth accordingly, although don't feel deprived. We do a holiday to the med for a week once a year (sometimes twice).

Having said that we've got our eye on moving to somewhere bigger that will stretch our finances but we do actually need to move and it would be nice not to have a postage stamp sized kitchen I can only fit an undercounter fridge in especially now we have a kid.

I do agree luxuries that put you in crippling debt like designer brands and luxury cars on finance are a bit ridiculous if you can't afford to waste money, but I think investing in a house is a fair thing to stretch yourself for, especially since most of the time it will be an appreciating asset, so if life does go tits up you can (most of the time) cash out with increased equity. So we intend to buy a bigger house but also keep at least a year of expenses put aside in case we both lose our jobs. Our mortgage will be our only debt.

I think it depends a lot on your upbringing. Some people have never been taught to budget. Some people have been raised to be aware of where and when every penny is coming and going.

I agree with this but I also think there's a lot of black and white thinking on this thread. I always know where every penny goes but I've also had loans to start my business and used 0% finance to buy things whilst saving the money in an interest bearing account.

Being financially responsible and using credit/loans are not necessarily mutually exclusive.

I’m living above my means because my means barely cover my living costs, not because I’m always off on holidays or out for dinner etc - I haven’t been on holiday since 2016. The past month my tumble dryer, washing machine and car have all broken, so they’ve had to go on credit because I simply don’t have the funds to buy them outright (except my tumble dryer - I’ve forgone a new one for now despite it being an essential!). For context, like lots of people, my living costs have soared (mortgage has gone from £700-£400 a month, childcare, gas & electric) and I took a new job with better long term prospects but a short term paycut so my outgoings are going up but my income has gone down.

4O something here . Modest mortgage . 12 year old car that does me just fine . Holiday saved up for and paid off monthly . No loans no credit cards . Shop at Lidl and buy clothes off eBay /vinted.
love my life. Don’t care what anyone else has . As long as I’m keeping my head above water that’s what counts.

My parents were about as bad as you can possibly be with money, which is why I was determined I would never lose my home, have arguments with my partner about money, or be hundreds of thousands in debt.

In Charles Dickens' David Copperfield, Mr Micawber's famous, and often quoted, recipe for happiness: "Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."

I know people on each end of the scale, varying salaries. For most I don't have a clue about their finances, especially the older generation. I think it's now less taboo to talk about debt.

The biggest difference between the income bands is the availablity of cheap credit. If anything in our home broke or we needed to upgrade we could afford to replace it immediately with cash. But we've made use of 0% finance over the years and left the savings to gain the interest. Growing up on a council estate everyone seemed to use provident. The APR was ridiculous but it was the only way many could afford to replace a washing machine. And don't get me started on those stupid TVs that you had to insert coins into to watch.

I'm terrible with money and certainly dont live within my means. I am lucky that we have a relatively high household income (6 figures between us not the usual mn £250k salary) so it means the debt is servicable.

I suppose that knowing, or rather assuming one cant account entirely for the future, that both our next promotions will see us earn an extra £20kish each.

We also have family to fall back on if things get bad. I dont love the credit card debt but it is interest free and now nursery fees have lowered it will start to reduce.

But I'd rather not be miserable in the meantime. I will probably get flamed for this, but we are also due to inherit a fair amount between us, so I suppose I also have that in the back of my mind.

Me and my husband know a few of these OP, and it is so hard not to get sucked in or feel rubbish!! We drive old cars, nothing wrong with them, just not swanky ones like some of our friends - but they're economical and well looked after and get us where they need to be. We have no debt, and a manageable mortgage, even when we have to renew our fixed rate at a higher % we have a lovely life and sometimes I need to remind myself of that.

A good friend of my husband badgers us constantly about moving to a bigger house, we have a three bed semi, and one child, so we don't need to move! Sometimes I think it's to just this choices. A few of them say it will benefit them in the future having a huge mortgage now.

We live within our means, only debt is our mortgage and we don't buy anything big on credit. I'm staggered by the number of people who stretch themselves to pay for luxury cars on hire purchase each month. My brother works in personal insolvency and his case load would suggest thousands of people do live well beyond their means

I read on here once not to do something (holidays etc) if you can’t afford to do it 3 times over. I think it’s a good rule.

Lol - that’s the silliest advice I’ve read in a while on here. I can afford one holiday this year that I’ve been saving up for. Should I keep saving and wait till 2026 to go? Fat chance. Sorry, but life is short and you do have to live a little. There’s nothing wrong with that.

I agree that that’s ridiculous advice. Living within your means is sensible but scrimping and saving every penny and not living a little if you have spare money is not a great way to live either. I have elderly relatives in their 90s who saved all their lives rather than spend and go on holidays, and they say that their one regret is not travelling lots while they had their health. You save all your life and then it can get eaten up by care home fees etc very quickly if your health declines - I’ve seen this happen.

I have a couple of friends who openly tell me how much they live above their means - living a life of luxury, but only by taking out another credit card, or borrowing more against the mortgage. I find it a bit bizarre, as a lot of the purchases are really out there, but each to their own. I'd be so stressed with the CC repayments!

I really don’t think you can compare a ten year old Audi with a Bentley to be honest , and where as sure, some live frugally to afford other things like you, the fact remains many people are wealthy and can afford to buy expensive things, without having to sit with a lunch box.

We live below our means I think. Well this is where it's confusing as we plough loads into pensions (£3.5k a month between us) and a chunk into savings. So by the time all that has moved into various accounts, we're left with very little. I guess we could not do that and live the high life. Maybe many people do in our position. We certainly drive a far less flashy car than many we know! I don't get sucked into keeping up. I look at designer handbags and immediately think 'what a waste' but each to their own!

We are living "above our means", in terms of getting into debt with the energy supplier, and maxing out overdrafts each month. But we have two young children, so can't really not put washer on for example, when everything's covered in poo, or have it cold in their bedrooms.

We don't go on holidays, modest house, always buy 2nd hand etc, and OH works 6 days a week whilst I do 2. HOWEVER, we do spend on getting stuff for the children like correct car seats or shoes that fit properly. Also softplay or an icecream at the park or petrol getting to free / cheap stay and plays. Also decent food for them. In theory they could survive on less, but would rather spend on them gor whst I consider basics, than give everything to bloody Shell. I think it's easier to live beyond your means when cost of living is so high, even without frivolous stuff.

The uber wealthy are a different breed though. Lots of people have money because they made cuts elsewhere. I earn the same as my BIL. He has more stuff. I have more cash money. On paper, he LOOKS more wealthy. He's not. I could go out and buy something nice outright, but because he's spent all his disposable on credit card/loan payments he can't. You don't always know what "wealthy" is, because people live above their means to look it.

And tbh, a 10 year old Audi (not a bog standard one) at age 25 is still a nice car. And I'd take a LOT of different cars over a Bentley even if money was no object. The definition of "nice" or "flash"or "fancy" is subjective. Personal preference plays a big part. And I'd never actually thought about "sitting with a lunchbox" as cost cutting. I just don't want to spend £50+ a week on food I don't really enjoy.

If you follow Dave Ramsey you'll get a pretty clear picture of what's going on and why.

I’m finally living within my means but for years I didn’t. I was funding school/uni fees for three DC (my choice) and paying about £2k a month for the mortgage. This would have been ok as I’m a high earner if now XH had fulfilled his side of the deal but he didn’t, he constantly lost his job but still bought vfucking stupid cars and motorcycles 😡. I used CC a lot, juggling funds left right and centre and spending nothing on myself. Holidays were camping in UK - no regrets about that, we all loved it! DC are now early 30s and I’m finally straight. XH is not but that’s his problem!

it was a risky strategy for sure and not one I would have taken if a) I’d known quite what an idiot XH was and b) I hadn’t had a safety net (my DPs). I never had any money off them but I always knew they would have helped if necessary.

Not spending on cars/clothes/holidays has become so ingrained that I can’t change the habit now, but that’s fine. I finished what I started.

I think a lot of people stretch themselves to their limit, such that pretty much all their income is spoken for - i.e. the most expensive house, PCP car deal, etc. they can get on their salary. This is quite obvious when I go back to where I grew up - it's not the most affluent part of the country, but people work hard and are very aspirational. Houses are all newly renovated inside and out, men and women are perfectly groomed when they leave the house.

No judgement here - in some ways I think I'm a bit too cautious with money, but it's hard to shake off.

Simple. Do what you want. Pick and choose how you join in. What others do is none of your business.

Dickens: Annual income twenty pounds, annual expenditure nineteen nineteen and six , result happiness.
Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

It really depends on circumstances though, right? How exactly do you define living above your means? Putting a holiday on a credit card? We both make good money and have no kids, therefore we do buy designer things or have no problem putting 20k for a holiday on a credit card. Does that mean living above your means if it gets paid off?

Do you think that was also because most families were single income? However, from my experience,most people could afford a reasonable home without too much difficulty. Even on a single income. My parents lived exactly as you described, however at the same time they did all those things and could pay for the house and cover their bills. That is not the case anymore. 😞