To be shocked by how many people with expensive lifestyles have no savings?

[SnugBird]

Quite a few people I know have what looks like a very expensive lifestyle - nice cars, business class flights, 5* holidays, but at the same time have little to no savings. I think I’ve always assumed that higher spending like that would go hand in hand with having a financial cushion, so it’s been surprising to realise that’s not always the case.

AIBU?

I’m not saying it’s a universal thing, just that it’s come up more than I expected and made me question my assumptions a bit.

I don't save.

It was a choice. We could save and keep money for a rainy day. But, I want my kids to have experiences. Holiday, clubs, nice days out. So we do these things. My kids are growing fast and one day they will be adults and their childhood would be gone. When we get to that point, money won't be as much of a problem and savings can come then.

Myself and husband have public sector jobs so feel we are redundancy proof. But still could afford to live on one wage if something happened. We own our house with mortgage which is affordable even with interest rise. We just don't have savings for rainy days.

I grew up as poor when I was a kid. My first holiday was a school trip abroad when I was about 14. I want my kids to experience what I didnt and so far they have been having great experiences. My son is already 12, nearly 13, so the years of family holidays are getting less and less. I want to live life to the full now and enjoy them growing up with great experiences. I don't see the point of seeing £££ going up in the bank when we could be enjoying life now. You only live once!

Yes OP seems extremely naive. She either socialises with newly rich, lower class people who constantly talk about money, in which case it's no surprise that they have no savings or she was just being humoured. Lots of wealthy people have their assets in stocks, bonds, property, trusts etc, which don't count as savings. They'll have a small current account with cash on it for everyday stuff so they were just humouring you by saying they don't have a lot saved up.

This is something rich people tend to do when talking to people they feel are below them in social status. They get a kick out of pretending to be relatably broke and mention numbers from a bank account that's just for cash flow. Sometimes they might be overdrawn too and will loudly proclaim this to make themselves appear poorer or more humble than they actually are.

I’m the exact same. I have a SIPP and have an Emergency Fund - I save small amounts into these each month. Though, life is for living too. I aim to maintain balance.

Just another fabricated rehash of the same old rubbish. Get some original ideas OP.

Do you really know that though?

We have the lifestyle you describe and we have six months worth of expenses saved but that’s it really. We’re in the expensive childcare years and I’m not going to miss out on fun and holidays while my kids are young just to pile more money up in the bank.

We’ve got no debt and plan to overpay our mortgage when the nursery bills stop, plus my DHs career is on the up. We do save into our pensions but other than that we spend the majority of what we earn. I don’t think that’s particularly odd.

ETA I have no idea how much savings my friends have as it literally never comes up in conversation.

Has it really.

I thought this phenomenon was well known. The average saving pot is very low, but also age dependent - rather than earnings dependent

I think it's odd that people don't notice or pick up things about their friends. Even though we don't talk directly about money much, I know my friend:

• went to private school
• refurbed their house in the city centre before moving to our suburb (aged 25)
• have done significant refurbs of their house and garden and are planning more expensive work
• husband earns less than I do, she works PT as a teacher, so definitely earns substantially less than my husband
• I needed to explain some pension matters to her in a work context, and another friend explained investments to her (e.g. she said if you had a million that is £20k a year for fifty years - other friend explained investing and loving off the interest)
• just replaced her mugs "just because" for "spenny" ones
• when she was between jobs, she made a joke about us paying her mortgage in the meantime

Another friend is selling her house, so we know her house price and the price of houses she's buying.

Basically we chat and it's obvious that she has a "spend what you've got/there's family money" situation going on. She knows we have a "fair whack" of savings because we've shared houses were interested in, and she knows my husband's salary because we joked about the fact he was taking a punt on a very highly paid job and didn't expect to get it - but did.

Richest bloke I know drives a 12 year old Ford Focus.

But saving and enjoying life are not mutually exclusive and many people do both.

You don't know how much they have in savings. People don't say sums generally.
I would say I have mall savings, in reality I have solid amount.
But that's no one's business.

I imagine people aren’t always honest about their savings, especially when talking to others who perhaps don’t have the same. For example we do have savings, although most of it is in investments rather than savings accounts. When around one of my friendship groups who don’t have as high salaries or savings, and they are all talking about being skint or not having savings to pay for house repairs etc. I’m not exactly going to come out with how much we have, I’ll sympathise and nod along.

When people say they’re skint they often mean they don’t want to spend money they’ve put aside already. I often say I’m skint this month but what I mean is the expendable income I have allotted myself is low/

People have really different attitudes towards life, including finances. Not everyone is ‘sensible’ or prudent. Plenty of people live for the now and would rather spend on the present than save for the future. Lots of people have significant debt.

You may not agree with it, but it’s not shocking.

It's generally the opposite. People either spend OR they save. Relatively few people seem to be able to do both.

I see a lot of it because I'm an accountant. It's very polarised amongst my client base. Some high earners have literally no savings/investments because they spent it all - easy come, easy go. Yet some low earners manage to save by simply not spending. Surprisingly few are in the middle with relatively good incomes, relatively healthy spending but relatively healthy savings too - very few!

Case in point is a dentist earning £100k per year. Not a penny in savings at all. His only "bank account" is his current account. Pay goes in every month and it's all gone by the month end. He just varies his discretionary spending each month according to his variable income and other costs. I.e. in the two months he has big tax payments to make, he spends a lot less on non essentials. His bank statement is quite a sight - clothes every week, lots of pub/restaurant payments, numerous payments to Amazon, Currys, John Lewis probably for "gadgets" etc. Easy come, easy go!

This-

People who have saved all their lives will end up in the same care home as the ones who haven't.

People who have paid into a private pension will be worse off than People who haven't and qualify for pensions credit- free dental/ free optician appts etc.

Paid council tax. Paid rent for you.

They don't need to save. And will likely end up at a similar level of retirement as those who saved- unless you're ultra rich.

Not at all and usually form families with no other wealth eg non wealthy parents.

Unless you've inherited or similar windfall who could possibly save that on a normal income?!

Im not shocked that people make different decisions about spending and saving.
My husband was a saver ,he died aged 48 yrs and when he was dying he said he wished he'd spent a bit more on holidays.
Im not so much of a saver and beginning to think i should have saved a bit more for retirement.

Maybe they’re of the ‘you can’t take it with you’ mindset?

My accountant doesn't get to see my bank accounts.

Just asks me to fill in my tax deductible expenses into a form.

They don't know how much savings I have. Though do know my interest from savings.

How do you know they are telling the truth? Some people exaggerate and others down play.

Some people don’t have much in ‘savings’ but have big investment and pension provisions.

This is interesting.

We are savers. We actually have by any standards a nice life - generally a weekly takeaway, paying for a few house jobs, a foreign holiday a year minimum, don't have to think about what we buy, but also shop second hand and have one small 14yo car.

We really, REALLY want to "splash out" furnishing our next house because being frugal bit us on the bum furnishing this one.

But I just can't see us doing it. I think the pressure to spend our money "right" and to choose something lovely and long lasting will overwhelm us and we'll cheap out again.

I know people like this - huge mortgage, 2 cars on expensive finance and not a penny in savings. We have an old banger of a car and are saving hard to pay off our mortgage. But everyone is different. You can’t tell others how to manage their money.