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?

No savings to some people is an overdraft and loads of debt.

To others they still have £20k accessible and a pension pot worth half a million.

There’s periods in your life where there’s often no savings because you’ve had to spend it - amongst my friends there was a run of 5-7 years where everyone got married (with expensive honeymoon), bought a house, had a maternity leave or two. Savings were spent and then maternity leaves ruined resaving. Throw in a couple of years of expensive nursery bills, and it’s pretty normal to get to the point of your youngest starting school with little savings.

The same people are in very different financial situations 10-15 years later.

if they have been sensible then why would they only have a small workplace pension?

Why are you bothered about how others lead their lives?

DH has been surprised to find this among his colleagues - he works in a sector where episodic redundancies are standard, but he is well paid (as would have been his colleagues). Given this, we make sure we have a safety net, but when one round of redundancies was announced, it was clear that a fair number of his colleagues wouldn't be able to pay their mortgages after a couple of months. While DH has always been able to find another job within six months, it's not guaranteed, and having savings means that he can find the right job, rather than having to take the first one that comes along.

I know someone who works as a debt adviser. He's lost count, over the past 12 months especially, of the number of seemingly "wealthy" people he's seen without a penny to their name - including the couple who said their leased Teslas were "somewhat necessary" for their daily commute of less than 20 miles each.

🤣🤣🤣🤣🤣

They're in for a shock then. Local Housing Allowance almost never covers the rent.

And of course saving is rewarded. My portfolio, with no effort on my part, is worth 83 pc more than it was six years ago, not including dividends.

But feel free to ditch your job and live on benefits if you think it's the life of Riley.
🙄

Also if one of them was out of work there's no nursery bill.
Another 'we're on our uppers on 250k' post. Reality checkpoint, mate.

But what do you think?

Cost of living and devaluation of pensions. Nobody gets final salary etc any more

but they have been ‘sensible’!
Didn’t this ‘sensible’ behaviour include playing extra into pension, starting a pension early, some savings into addition to a pension..?
if none of this happened, how were they in fact ‘sensible’?

OP there was a thread recently on people bragging about how they're blowing their money now so that they can get free social care when they get old

Forgetting of course how few people need social care and that they'll disadvantage themselves in later life as they have no savings

So its a purposeful financial strategy for many.

That sounds very interesting @Badbadbunny. would love for you to tell us more, for example do you see a trend across professions? Which clients/ professionals are unusually the best or worst?

I think this is often true although you can't always tell. I do know quite a lot of people who spend what they earn and increase their lifestyle with each pay rise. They don't have debt but they also don't have savings. I think its called "lifestyle inflation" and its a known phenomena. My husband is close to his cousin who has a joint income of about 160k with his wife and they have no savings but they do have a great lifestyle. Personally I'd not rest easy without at least a year or twos worth of income in the bank.

This doesn't surprise me - when you "show" your cash with a big house, expensive car etc you naturally will have less of it left. When you live below your means - small house, crappy car, if you earn the same you'll have piles of savings.

Me and DH moved to a big house recently and were poor as a result, the bulk of our savings were plunged into property - everyone we know started acting like we were loaded. I found it funny because when we lived in a tiny house but actually were loaded (huge savings) friends & family were always offering to pay for things for us/assumed we had no money!

This is my experience too! It's one or the other - and "spenders" will always look richer to others, whereas savers will appear poorer than they are

This is me. Impulse spending is a problem. I cannot resist a "bargain". A 99 pound dress that's now 25. It makes sense but I will buy 4 dresses. Not making mcuh sense now. Need to stop.

As with most things on MN relating to other people's finances OP, it doesn't involve or impact you so no need to be shocked.

Being sensible these days doesn’t equal a great pension, a lot is to do with age as schemes are far less generous to newer entrants.

Yeah I have never been an impulse buyer tbh…if I need a dress then it’s for a reason and I will look for one I love at a good price
and one I will wear again. When I was in my 20s-early 30’s and I had lots of weddings I borrowed dresses from my friends! Saved an absolute fortune!!