To think most people my age (32) are making huge financial mistakes?

[ThatPinkHedgehog]

I see so many people in their late 20s and early 30s struggling financially - overspending, not saving, relying on ‘buy now, pay later,’ or just assuming they have time to figure it out later. AIBU to think that financial literacy is seriously lacking in my generation? What do you think the biggest mistake is?

I don't think that's the case amongst most of my friends in this age group. They've generally bought houses or got fairly significant savings. A few cars on finance which I roll my eyes at but they're affordable. I only know one person who had a credit card habit and they actually gave that up a few years ago.

I'm not saying those people you've described don't exist - they must do. But I think it will vary substantially from group to group so I don't think we can generalise.

The biggest mistake is thinking you have a choice in the matter.

Not in my circles of that age group. Everyone seems pretty clued up and responsible. I see people with that mentality in their early twenties (as you’d expect) but seem to buckle down financially around 25. Some have been financially responsible even longer.

There’s certain people who like to keep up with the Jones’. In our 20s we were in awe of a couple with fancy cars and a massive plasma tv (that cost £2,400 back in 2006). Turned out everything was on credit and they owned nothing. Definitely not how we wanted to live.

I think we look back and think the generation before us were better with money but things were cheaper.

My aunt bought a house in North London in 1990 for 60k. You wouldn’t get a shed for the whatever today’s version of 60k is.

Life and finances are pretty hard for young people now.

I think you can look at any age group and you'll find people who are clued up and others who have no clue.
You'll find people who are 'sensible' , 'cautious' , or whatever word you like to use, and people who are quite the opposite.
In any generation, some people like to 'buy now, pay later' and others shy away from any sort of credit.

So yes, YABU to generalise about one age group.

I'm a few years older, mid 30s and don't recognise what you describe, but I also don't tend to ask how my friends are paying for things so it could be credit. Most of the families we know have mortgages and seem financially together, with a similar lifestyle. Although some are higher earners so have bigger properties or nicer cars and more luxurious holidays. It's all relative.

We live in working-middle class commuter area.

We've been seriously overpaying on our mortgage while our rate is low (rate ends next year) and will have it paid off within 8-10years.
We don't have any credit. 2 older cars (2018), no finance or loans. We have modest holidays and a nice life but not lavish at all. Both have pensions, they won't be great but we're trying at least. Financially I think we live absolutely within our means.

I do things like stack discount codes, wait for sales/offers, shop around, use cash back, sell on vinted, save for big purchases and budget wisely.

I think it depends on the circles you move in. My son and daughter in law are that age and were very financially aware from when they started work on grad schemes, they saved while renting and sacrificed holidays etc so they could save to buy a flat, lived there for 6 years and recently bought a large 4 bed house in a lovely but expensive area. They also got together at 18/19 at university so have had 2 salaries to put in the pot for a long time.

They want to retire at 55 so have ensured that their pensions will enable this to happen. Now their sacrifices in the early years have paid off and they can afford great holidays, meals out, good social life etc.

All their friends own properties and have savings, pensions etc. But they all have highly paid professional careers, and only one couple has a child, so they can all afford their lifestyles.

What do you think the biggest mistake is?

Spaffing thousands on a wedding.

It’s a bit unfair to judge people who need to use finance when well off people will always have financial support from their parents to help them get on the housing ladder.

This. I’m also 32 and don’t own a house or have huge savings. All of my friends my age who do own a house either had substantial help from parents, an inheritance which became their house deposit, or the opportunity to live at home and save money until they could afford to buy and move out.

Not everyone is so lucky. My parents have never been in a position to help me out financially and due to family circumstances I had to move out of home relatively young, so have been paying rent for most of my adult life, which makes is impossible to save enough to buy. My husband was/is in the same position. We’ve accepted that we won’t have a house deposit any time soon (I am now part time and we have two DC) and that by the time we do, we will probably be too old to get a mortgage that we could afford to pay off before retirement anyway. We do save but we also spend because life is for enjoying and we work hard for what we do have.

Not in my friendship group either. I’d say between 27-30, the serious saving started and between 30-35 everyone bought their houses. I’m 35 now and in the process of buying a house with my boyfriend, and I’m the last of all my friends to do so. We’ve all saved for nice holidays, days out and treats within our means every now and then, but no one in my (mixed gender, 12 of us) group has ever been involved in “buy now, pay later” or bought daft cars they can’t afford, paying them back over years and years.

It's called cost of living and living in the real world.

I actually agree with @HeddaGarbled - expensive weddings are so easy to get sucked into but are a total con. Car finance used to be an ok option pre Trussenomics (although I know that opinion will be flamed!) but is now also a con.
IMO however the biggest mistake anyone can make is not understanding compound interest/pensions and how it can build wealth in the background from fairly small investments. I’ve been saving into pensions since I was 21, age 41 the pot is already at a decent amount and for 5-6 years I was earning only £2 an hour over minimum wage.

My friends are all pretty financially sound and sensible (32-36 age bracket).

Me and my OH are always flat broke, had to get the car MOT'd on finance, and a new £120 bed on finance when ours literally shattered into 1,000 pieces.

The only difference is that we have two children, and all of our friends are child-free (mainly by choice). So I suppose the biggest "mistake" was having IVF and children. Of course I wouldn't change it for the world. But in terms of education / buying a house / starting careers etc, we are otherwise the same, so there's no other accounting for the differences in wealth. Actually, except for one friend whose parents died tragically young and left him a chunk of money. But nothing you could plan for, and obviously nothing you'd want.

@ThatPinkHedgehog My dd is 31. We live inner London she came from a single parent home and has had no help financially. She left uni with a degree and a large amount of debt.
She now owns her own home (mortgaged to the hilt but managing) her uni debts are paid. No other debts.
All of her wide friendship circle are pretty much the same.
I really don't know where you drew your experience from.

Well degrees aren’t all equal. Some will lead to a good salary and a lot won’t.

I am a lot older than you, and there’s always a minority like that (it includes me, annoyingly)

Hmm, is it a mistake though? I'm 34, went to uni, paid off my student loan, own a 4 bed house with DH, both have good stable careers, have paid into pension plans for over a decade. But... The future doesn't look bright. Retirement seems like a pipe dream so what was it all for? Why am I paying hundreds per month into a pension scheme when I'm unlikely to see that money? It does make me wonder if we're the mugs.

Whilst I agree for many there is no choice, it does often seem that far too many things are deemed “essential” when they’re really not, eg regular appointments for nails and eyelashes etc, multiple tv subscriptions, multiple holidays/luxury holidays, frequent brunches out etc. and I think seeing others apparently having all these things on social media has a huge effect on younger people especially feeling they’re entitled to a certain lifestyle.

With inflation what it currently is I am not really bothered.

Sure when we were on 1% or so I didnt have any loans, credit cards, car finance or debts etc. Saving actually made sense. Prices were relatively stable.

Now I think whats the point. £1000 today is going to be pittance in 10/ 20/ 30 years. The price of everything is just doubling before your eyes at every turn.

I may as well spend everything and more at this point in time.

That might sound paradoxical as interest rates are higher so borrowing costs more; but it depends what way you look at it.

The table I have been meaning to buy for the past 3 years is now double the price it was if I had just bloody bought it when I first saw it. I still want to buy the table. So now I just need to pay more.

Not just your generation - I'm 44 and that was me in my 30s too. Its the country- financial education is appalling.

I think also the sense of whats the point - it's really faulty thinking because the best time to start to save is always now. There's a whole course run by Rebel Finance School about finances - it teaches about compound interest etc. They have an example on it called Never Bothered Ned who they use to show what happens if you never bother (answer is you end up with nothing, versus actually doing quite well once compound interest kicks in and starts to work in your favour).

God its crazy - I agree there is WAY too much emphasis on spending. I've often thought this, that since the second world war the predominant identity available to people is as a consumer.

Shopping in malls, shopping online, shopping for deals etc. Made worse by social media which tells you to consume more and buy your identity. Even MSE which people worship (and is good) is also reinforcing people as consumers in a marketplace. Whereas if we explicitly said this non material thing (e.g. kindness) has value, and how do we build society based on that, we would ironically probably all be better off.

Whilst that’s a nice paper excercise and does work in maths world. In real world you have to compare RPI and returns from saving (unless you have a considerable amount of excess that it doesn’t matter anyway).

So I think the issue is for people in 20s and 30s the U.K. savings vehicles such as ISA are not great for keeping up with RPI if you need to use a cash ISA as it’s likely you will need short term access to that money.

Sure stocks and shares ISA definately beats RPI in most years. But cash ISAs are lot closer to RPI and in these recent hyperinflation years people’s savings actually been eroded away.

So to me it has made no sense to save in the last 5 years.