To think that if you’ve got savings, you’re not poor?

[CleverTealGoose]

I’m not saying that having savings automatically makes someone wealthy or financially comfortable, but I do think there’s a difference between being poor and having money set aside.

If you’ve got savings that you can fall back on, even if you’d rather not touch them, surely you’re in a different position from someone who has absolutely nothing to fall back on?

I sometimes see people describe themselves as poor or broke while also mentioning that they’ve got thousands sitting in savings accounts.

I appreciate that savings can be earmarked for particular things but ultimately that money is still there.

Like there is a difference between being genuinely poor and simply not having much disposable income.

Well yes, obviously because truly poor people can't save.
Isn't that a bit obvious?

People will not go around explaining "I have no money in my purse or on this card, but I do have a small pension pot and about £10k put aside to help my two dc through university".

Why would they?

It’s complicated lots of older people are cash poor but asset rich but we treat them like they are poor.I don’t necessarily think a younger person renting with a few grand in savings is richer than the poor pensioner with no savings but a mortgage free house.

That’s precisely my point though. There’s a difference between having limited disposable income and actually being poor. Nobody is suggesting people need to give a full breakdown of their finances but having £10k set aside, regardless of what it’s earmarked for, puts you in a very different financial position from someone who has nothing to fall back on.

Lots of people feel poorer but not necessarily poor. Despite having savings you can still feel poorer if you can’t afford things you could afford 3 years ago. I’m not sure what your point is about this really. Is a relative winding you up?

I suppose it depends how you see savings though - a lot of people honestly block it out because they would have pulled extra shifts when they had the ability to specifically to make that happen. They may be out of work or unable to for whatever reason, but they would still never touch something they set up for their kids as the only nest egg, so they won't even think about it as theirs.

A lot of people can't save because they don't have that restraint and see any money as money to spend right now because they might not be here tomorrow!
So I don't think it is just about some lucky few, but about the psychology behind saving also. People can be on the same wage and one will be able to save while the other fritters away on rental cars and designer goods.

I think it depends what language they use - are they saying they can’t afford something or that they genuinely believe they are poor and are comparing themselves to people who are in genuine hardship?

I’m very worried about money at the moment and I have about £8000 savings.
I’m not working due to caring responsibilities, but waiting to see if I’m eligible for any benefits to ride us through this. At present our family will be completely out of money next year - even with bare minimum spend and I’m awake at night worrying about it.
So when a friend asks me to go for dinner I do generally say I can’t afford it right now / am on a budget and suggest other ways I can meet up. We are privileged to have a (very small terraced house) but we may lose it next year.

However I think you’d be able to understand why I’m trying to avoid that and might say that money is tight right now or that we are struggling.

Aren’t you entitled to benefits with some savings?

I think it is up to 15k of savings, any more and no entitlement. PIP they don't count savings at all.

So if some savings aren’t a barrier to benefits having some savings must not mean you aren’t poor?

Not always.

I have savings but live in a tiny flat, no mortgage.

Someone living in a 3 bedroom detached house with no savings but no mortgage is still in a better position than me.

Personally I find it a little odd that you can have someone with 15k of savings who gets benefits and someone with no savings doesn’t due to income.

But someone renting or with a mortgage with no savings isn’t necessarily in a better position?

I think people think differently according their situation. In passed times i have thought as long as i have gas,electricity and food I'm not poor even if i had zero pounds. And money was coming in a few days later as long as I had them things its fine.

But now i feel like if I have money left before money is due in then things are not that bad. But also I do have things on interest free credit if I couldn't pay that before interest hit then I would feel theres big issues.

Currently i have 800 in savings. I some times have to borrow a bit from savings if I get short then I put it back once money comes in. But I can't save long term because the savings I do have will go to pay credit before intrest hits.

So i wouldn't class myself as poor but other people may do.

I think poor is having to choose between heat and eat. Using food banks. No bus fares.

Yes, the working poor who slog away daily in a minimum wage job with no savings while someone can be at home with a nest egg of 15k applying for jobs.

There are different levels of poverty though and I suspect those slogging away burn out quickly too so presumably will be more likely to be on PIP in their 40's+.

I also am unsure why someone who has to maintain a whole house with no savings is better off than someone who has a small flat and savings.

There are people in this country who genuinely cannot afford to feed, clothe their children. If the washing machine breaks down, they are reduced to handwashing everything.

When charities have to provide beds for children because their parents can't afford to do so, they are living in poverty. Those with savings are not poor, no matter how much, or where they are kept.

I get what you mean but I think it’s complicated. My granny would have had savings but she spent very little from a low income. I think her only form of holiday her entire life was to very occasionally visit a relative. She made most of her own clothes, I used to sit with her while she wet newspapers and rolled them tightly into kind of paper logs which would burn more slowly on the fire (I remember the heat being a bit crap from them though). She grew a lot of her own food and it only recently dawned on me that mince pies were supposed to be a Christmas thing because she used to serve them all year round - she’d have been bulk buying reduced price mincemeat after Christmas every year. She’d have been able to cope with a one off large cost due to the savings she made from a low income by living a very frugal life but she wouldn’t have been been able to cope with a regular large additional cost.

Money saved for a holiday or some other luxury, I agree with you.

Money budgeted for an essential cost, not so much.

Depends how much savings we’re talking. I know someone living in the wardrobe sized spare room of an elderly man’s trailer. He recently inherited 10k and has been asked why he dosent move out and rent his own place.

With rent being around 1k for a small place he’d live there less than a year!

It’s not just savings that decide if someone is poor so I think your test is too simplistic.

According to Joseph Rowntree Foundation 22% of people with income of £15k or less have no savings - obviously that means the other 78% have some savings but I would still say they are objectively quite poor.

Then for people who earn more than £50k, 3% have no savings - but that doesn’t make them poor just because they have no savings.

It is clearly a function of both income and savings (and potentially debt too?). But a startling number of people have no savings - I do think that’s a sign of poverty in itself.

Well nobody who has savings would be saying they literally have no money.

Broke to me means UC/min wage work with not enough hours, fuck all income from much else. No savings, loads of debt. No assets.

Just because you have no savings doesn't mean you are poor either.

Two people earning the same wage with similar outgoings may make two totally different choices about their priorities.

One (A) may prioritise savings, one (B) might prioritise socialising.

So 5 years down the line A has £20k in savings and B has nothing.

Is it fair to call B poorer than A if B basically pissed their spare money up the wall?

It's all subjective.

But a pensioner who has a mortgage free house but very little income is 'poor' in their ability to spend. They could cash in their house but then where would they live? One of my neighbours is in this position. She owns a £400k house but it's a hovel, she can't afford to replace anything as she lives hand to mouth through having so little income.

We need to look very seriously at the equity release market to solve this problem. We need a regulated system that gives home owners an opportunity to extract value from their house without being ripped off.

My MIL.used to help out a family who would claimed to be struggling, but it turned out a large proportion of there out goings were direct debits going into savings accounts.

@OutOfTheOtherSide plenty of older people have properties that they could sell and still have something left after downsizing. Understandably many don’t want to move or leave it too late. Equity release has reformed and can be a useful option for some.

Yes ...I understand exactly what you mean. When I was young we had nothing left over once the monthly bill were paid. If the washer or something broke down it was a major stress. What could we cut out? Could we take on a loan? Might we urgently find a decent second hand one?
Now that I am old I have savings. I am not rich but issues like a broken washer are now a minor irritation not a major catastrophe. I may not want to spend my savings on such things but they are there and there is no anxiety at all about any unexpected extra costs in daily living.
As the lyrics of an old song says:
There's something lost and something gained in living every day.
Youth, with all its excitements, ups and downs and struggle is long gone.
Old age has come. I'm financially secure but there's less excitement a slower pace to life and more health problems.