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?

Agree. I think they've seen their parents live spending beyond their means so now they are clueless how to handle finances.

It must have been a very small house. I almost bought a one bedroom flat in Zone 4 in 1991, it was 65k. To be fair I just googled it and it’s ten times that now. Although apparently it is now apparently a three bedroom flat, no idea how as there was no room to extend!

I think the biggest mistake is thinking you are better than others. A rather judgy, smug and arrogant post OP! I'd get off your high-horse and be a little humble. Good for you if you're not "struggling financially" , everyone's circumstances are different.

It's because that's how we've all been conditioned to think/plan financially. I truly believe it's what the powers that be want from the plebs. They want us to be hamsters in a wheel of debt, spending as fast as we can and living hand to mouth. No one (well, very few people), actually save up to buy anything expensive these days, it's all on tick.

So much stuff on monthly subscriptions/repayments, it's shocking when you take a step back and see what's really going on. All these people with nearly new cars that they can only afford because it's on a monthly payment plan. All they're doing is servicing the depreciation on an asset they don't even own.

Same with sending every one off to university at 18, charging them eyewatering fees, and then generously lending them a truck load of money. It just encourages young people into a lifetime of debt, conditioned them to it, so it becomes the norm. I actually think that these days, university is less about learning an academic qualification, more about teaching youngsters how to spend money they don't have.

But when they've been conditioned into spending beyond their means, which credit and subscription based spending encourages, the concept of scrimping and saving and going without the latest mobile phone, a nearly new car, and foreign holidays, is totally alien. Shit, even what some people spend on takeaway coffee adds up to an eyewatering amount when you look at it on an annual basis.

Then you've got all these youngsters bleating about how they can't afford to buy a house. Well, that's something that's never been easy, even when property prices were much lower compared to earnings (interest rates were generally higher, so the monthly payments were higher). So often the 'average house price' to average salary ratios are quoted by the media. But that just leaves youngsters disenchanted and thinking they'll never be able to afford to buy a home. So they just give up and don't even try to save a deposit.

Reality is that very few people jump on the housing ladder half way up it, with an 'average price' home. You start off small, with a flat or apartment, and then work your way up as you build equity (and hopefully rising prices and salaries help along the way too).

So it doesn't surprise me at all, and I think it's exactly what the higher ups want - they need people to keep spending to keep the bloody economy from collapsing.

Financial literacy is indeed lacking in many 30-somethings, but not entirely their fault. Today's economic landscape differs greatly from previous generations with higher costs and stagnant wages.
Common mistakes include lifestyle inflation, delayed retirement savings, insufficient emergency funds, and overreliance on credit. "Buy now, pay later" services create particularly dangerous debt cycles.
Some struggle comes from genuine financial constraints rather than poor decisions. What specific issues concern you most?

I agree, spending £10-20 grand (or more) for a single day’s entertainment is insane to me, especially when same couple will then struggle for years to purchase a home - and thereby effectively burning tens of thousands more on top on of that on what would have been avoidable rent. Of course not all will struggle to purchase their home, but many do.

What do you think the biggest mistake is?

Not a “mistake” necessarily, but something I’d be wary of if growing up today - pursuing a career I I think will be “interesting” or that I’m attracted to “personality wise”, as opposed to a career that will offer a good/excellent salary in an area in which I’m reasonably skilled and is in demand. Of course this concept might also need to be applied at the age of 16 in terms of subject choice at school.

I don’t see age as being the issue. I’m 35 and have always saved very hard, no parents to help and never earned more than 28k in London but put 100k deposit on a house. It’s because I grew up poor. I do eat out and sometimes buy clothes though, I just don’t spend constantly.

meanwhile my mother in law sold her home for 1.5 million, downsized but is burning through her retirement fund at an insane rate and will run out soon. My partner is bad with money, is in his 40s and has no savings as he always spends everything he earns. Has an ‘it will be fine, I’m not going to think about the future ‘ attitude. I think it’s about upbringing rather than age.

We're between 27-32 and most of us own our own houses and have fully paid off cars. But no one drives anything fancier than a vw and most are 3 bed semis (in Essex so still not that cheap)

This year those of us with kids are doing haven and those without are doing a cruise. I don't find it a common theme in my circles but also most of us have degrees and parents who allowed us to save up at home to buy even if we weren't directly given money!

Absolutely 100%. I am now 38 and only started making sensible financial decisions around the age of 32 and I'm on such a back foot! Personally I'm terrible for a bit of buy now pay later and putting things on credit cards and making minimum repayments. I stopped that when I was pregnant with my first. Paid off all my debt in 6 months.

The biggest trouble I had is I never tried to further my career, or even find a decent career. I never really applied myself and mainly did fun but dead end jobs.

I do look back and wonder was it lack of confidence, lack of understanding about the actual cost of living (especially once kids came along)... I'm not sure!

I had a good time, and me and my husband are getting things on track now, but I do sometimes wonder what travels I could have done in my 20s if I had saved money better and how much easier it would be now to buy a house.

Being cautious with money is important, but the concept of “saving” is overly pushed too hard to the masses (probably by design). Saving is a means but not an end. The end is getting more money and sources of income. Ideally at some point before you’re say 40, getting some stream of accruing wealth that isn’t merely you selling units of your time. Of course owning a personal home and that home accruing in value is one version of this, but a pretty limited one as you can only benefit from it if you sell it - and then you need another place to live. If you’re earning 20k or 30k your whole life, you can save and be frugal for a lifetime, and you’ll still hardly have any money or quality of life. That’s what they should be telling us in schools.

Why are you assuming they are but you're not?

I’m not sure. I think different things are importsnt at different times of your life. I partied hard and holidayed lots in my 30s. No regrets. I still managed to get on the property ladder though but times were easier then to do that. I’m now creeping towards 50 and so many people my age are prioritising the flashy cars and big houses over retirement saving. That’s foolish. But you’ll get people making poor financial decisions at every stage.

Now late twenties, majority of friendship group now own reasonable sized homes and contribute significantly to their pension. Yes a few of us may have used a 0% credit card to buy furniture for said homes or have a car on finance but I think buy now pay later schemes haven’t been touched since uni.

I think what you describe is the same of all generations. The weird obsession with spending to income level, upsizing your life every time you get a pay rise while wailing they will never be able to retire.

Spending lots and working forever is what the government wants you to do though as they get more tax that way.

Lots of people my age messed round till they were 30 exactly as you describe and between 1998 and 2008 house prices doubled - it cost them dearly. They were then complaining they couldn’t afford to buy a 3 bed semi as first time buyers. It isn’t new.

But equally you only live once and I think I was too sensible when I was young in all honesty.

From what I have seen of that age group their biggest extravagance is what they spend on weddings/ honeymoon/ hen does etc. ( obviously I know not everyone spends like this but the question is generalised so I’m generalising).
im in my 50s and that level of extravagance was unheard of when I was in my 20s or 30s.

I disagree expensive weddings were a thing then too. Maybe they were more likely to be paid for by parents.

I am a bit younger though tbf

Expensive weddings weren't a thing for everyone then by any means. And none of the hen parties that I was invited to were abroad. If it did involve a night away from home it would be camp beds in someone's living room or a cheap hotel in a twin room.

They aren’t a thing for everyone now though either are they? We were unusual having a small, cheap wedding at that time, but maybe it depended also on who you knew. I’m also still in my late 40s.

Hens I agree weren’t the same scale.

Now late twenties, majority of friendship group now own reasonable sized homes and contribute significantly to their pension

May I ask if they've all bought with partners? What jobs and salaries they have.

As the mum of a 20 year old university student, I'm heartened by positive stories as MN is always going on about 30 year olds stuck in their childhood bedrooms because they can't afford to rent or buy a place.

While I understand the need for companionship getting a dog when you are 30 and single has a big impact on your choice of job opportunities and housing opportunities. Needing to work from home, or pay doggy daycare or find a flatmate who is willing to share with a dog will limit your choices.

Another thread where the OP disappears after one post ...

Also having a dog at 30 means holidaying abroad will be limited and your social life is curtailed because you have to get back for the dog on an evening out
I love dogs by the way

This with spades on. We employ a couple of 18 year olds in weekend jobs. The difference between those doing say, a plumbing course and those doing animal care or sports coaching is striking. I can tell you the ones now who will be buying a house by 30 and retiring at 60. Some have got their head screwed at 18 and are in the real world. If the others make a change by 30, they are 12 years behind the others.

I'm 31 and not particularly my experience. The majority of my friends have bought homes, have savings, drive older cars that they paid for outright, credit cards are used for airmiles.
There are some exceptions one friend doesn't have savings and just bought a very expensive car on finance but she lives alone and has significant mh issues which has impacted her saving and impulsivity. In fact the 3 friends I can think about who aren't financially literate that would be the common theme.