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?

@flapjackfairy These types of stories are the reason I won't get married or have biological kids. More than happy fostering with a long term partner.

Well if they can afford it, it’s not a problem. It’s when people are spending on non-essentials for a lifestyle they can’t afford that it is an issue.

Same age. My friends divide into 2 categories:

1. Those who had help from the bank of mum and dad but have been fairly wise with it - spent it on house/flat deposits mostly, and are in long term ‘serious’ jobs
2. Those who didn’t have help from the bank of mum and dad and are truly fucked - living at home or reliant on UC to pay rent, no savings, very much ‘between jobs’ all the time, never really settled to anything and seem to think it will all ‘work itself out somehow’. They would laugh if I even mentioned pensions as that’s ages away. Quite a few in significant debt

@XVGN

I do agree and it’s only really been in the last few years that I’ve been able to properly save. I don’t have children too which helps. Definitely agree re living a simple yet fulfilling life and it’s nice not to be caught up in ‘keeping up with the jones’s’ that’s for sure.

My friend is always moaning that she is finding things difficult on her wage which is significantly more than mine, and how she'll be in debt for years paying off debts acquired during through Covid. Yet she went on 4 holidays last year, bought the latest Samsung top of the range phone, her pillows were £80 each, has regular manicure appointments and she's got a Stanley branded chiller cup. It's like the penny hasn't dropped.

Now maybe I'm boring and over cautious, but I've thought for years that with the rise of magazines like Cosmopolitan and programs like the Kardashians, normal people think it's acceptable to buy £300 shoes and £640 handbags. When those things are surely aimed at real high flyers, and people raking in £100plus, not drama teachers from Dudley. I mean, if you're in your 40s and you don't own a house yet then trying to emulate the spending habits of a tv star won't help you get on the property ladder will it?

I have a friend who constantly tells me "it must be nice to be able to afford that" whenever we do anything like change the car or the wardrobes.

Their income is very similar to ours, their mortgage is smaller. Their family car is much newer and more "luxury" than ours. We do have two and DHs is very modern but it's also a company car so we haven't bought it.

They will drop thousands on a holiday in the middle of the school holidays plus a week in the Easter hols and usually the October half term. We go away once, and it's a UK self catering cottage.

She tells me her child "needs more" than basically any free activity we take ours out to do and will spend money every weekend to be out "making memories", theme parks, zoos, etc, anything that costs. And they always buy lunch. We do a lot of park walks, museum trips (the free entry ones often have activities for kids), have National Trust memberships so we go there a lot. We take picnics, mostly. We garden and bake and craft at home.

Then we spend our small amount of disposable on making our home nice.

We don't do all this because it's free or cheap, but because that's the kind of thing we all enjoy. But when she pleads poverty, I can't help but wonder why she doesn't consider doing more free/cheap. But if I ever suggest it she looks at me like I have three heads.

Maybe not when they started in the 70s, but things changed in the 80s, so they’d have had a few decades to provide for themselves. I’ve been paying in to a private pension since about 1986. The rules in place when you start work in the 70s didn’t lock you in for the rest of your working life. There was a massive push for occupational and private pensions in the 80s when the rules changed. Trouble is too many people stuck their heads in the sand and didn’t inform themselves- a bit like Waspis! You can lead a horse to water but you can’t make it drink!

The assumption that it’s easy to change behaviours and expectations is wrong - if you started work for over 10 years without paying for private pensions it would require quite a mindset shift to suddenly decide to pay in

Exactly. And, while most people would take advantage of an occupational pension if their job offered one, very few would know where to start with a private personal pension. That’s precisely why it became mandatory for every employer to offer a scheme.

But lots of employers were setting up employers pension schemes in the 80s and 90s, and when they did that, there'd have been meetings, brochures, etc to inform their staff of the scheme and inviting them to join.

Exactly that happened at the firm I was working at at the time. A few years later, in the early 90s, at a different employer where I was the company accountant, we set up an employers pension scheme, open to all our 300 staff. Every single member of staff attended a series of small group meetings over a couple of weeks put on by the pension firm. They had their own team of trainers going around all new schemes, giving presentations, Q&A sessions, etc. We, as employers were pretty generous with the employer contributions, not crazily high like public sector employers, but from memory somewhere between 5-10%. It was amazing to see how few employees bothered to join - uptake was probably a quarter at best. And this wasn't a low pay employer, we employed a wide range of people from office administrators through to highly qualified engineers, so you can't broadly claim none of the staff could afford it.

The reason compulsory workplace pensions came in was to try to force people to take responsibility as voluntary schemes/joining wasn't getting enough people signed up.

It's scary. First of all, setting up a personal pension SIPP is unbelievably easy. There can be no excuse that it's too difficult. It takes no more than an hour and can be done online. People are just unaware and/or not taking responsibility for their future.

I think that people are trusting in receiving an adequate state pension. Many have been infantilised into thinking someone will look after them in old age. This has got to stop. £50 pm is all you need to save, from 20 to 65, to get a decent starting pension. If you want more then save more and/or increase your payments each year as your salary increases.

Avoid the ESG funds unless you are happy to pay double to get the same benefits. Some people don't understand the choices they are making.

Perhaps, for the new cohort of workers, we need to remove the state pension (and reduce their NI contributions) and tell people that they have to look after themselves.

I agree, we thankfully no longer see people starving in this country or women/children/elderly living on the streets, so there’s a blithe assumption that a basic standard of living will always be provided as a human right.

It takes no more than an hour and can be done online.

That wasn’t the case in the 80s and 90s which is what we’re discussing here. Judging historical behaviour by contemporary mores is naive at best. And anecdata proves nothing @taxguru.

Why do you think you wont see the pension you've saved for?

Yes, it is lucky. Our elderly parents will die regardless, forfeiting your inheritance will not save them. So it’s:

1. Parent dies and leaves you nothing
2. Parent dies and leaves you a significant sum of money which makes your life easier

Which would you choose?

I do agree with lots of this but not sure what the solution is.

By the time I did my a levels I'd already forgotten most of what I learned in the gcse subjects I didn't continue with. Even if we did have an amazing comprehensive financial education at school, how many people would still remember it when needed?

E.g the average age for first house purchase is now 30-something and likely only going to get older - if we teach 16 year olds everything they need to know about mortgages are they really still going to remember it all two decades later - at which point things may have changed drastically anyway?

Plus whenever this comes up on here teachers say this sort of stuff IS now taught in schools.

At some point people have to take ownership themselves for developing their knowledge throughout their life, not expect everything they will ever need for the next 60 years to be drummed into their heads by the age of 16 despite a rapidly changing world. I'm only in my mid 30s but things like 'help to buy' which I used to buy my house weren't even in existence when I was in school so it would be a bit unfair for me to blame my teachers for never explaining it to me!

It's never been as easy to learn things - everyone with a phone has an encyclopedia of knowledge in their hand. Things like mse money course and "x...for dummies" are as accessible as it is possible to be. If you've ever lived in any other country you'll know how straightforward the .gov website is compared to alternatives. Citizens advice is oversubscribed, yes, but an amazing service that is completely free. Anyone with an address can access a library and borrow books on any topic. It's too easy ti always blame "someone else".

If you'd RTFT you'd see I'd already answered this... Because my work pension is linked to state pension age so I won't be able to claim it until 70 probably. I'm not saying it's a definite that I won't (which is why I continue to pay in), but it does seem like there's a high chance I'd be better having that money now.

I think you are a bit behind the times. There is far less expectation of getting married than ever before, I think. Also, I bought my first one bedroom flat with a little help with the deposit from my parents, in 1983 as a single woman. Fairly normal for the time. DP bought his a couple of years later, again with parental help and as a single person.
Wanting to buy on your own is 45 years old at a minimum.

We were both absolutely broke. Packed lunch, no one had their nails done back then, few meals out, no coffee out back then, at least not for us. Scraping around for petrol for work, old cars. Saving? We were surviving! One grim weekend we pooled money to buy a packet of burgers-and they weren’t great.
it’s obviously cheaper to live as a couple but we weren’t a couple then.