Why don't people look forward ?

p00hsticks

Before I start my rant / warning, I'll just add a proviso -
I'm aware that there are some people who are on minimum wage or on benefits who are really living day to day financially and not in a positon to save at all - this post is not intended to have a go at them.

But why do so many people on a reasonable wage seem to regard their monthly salary as a target to spend each month and not pay any attention to the advice about having a 'rainy day fund', ideally of at least six months salary ?

Recently there seem to be a number of posts on the redundancy, employment and benefits boards where people - often though no fault of their own - have been let go or dismissed, not been paid by their employer, or had benefits such as tax credits suspended due to a change of circumstances.

Often they'll immediately say things like 'we can't pay the rent this month' or 'we won't be able to pay the bills', but will tell you that they were on a good salary - they even seem to think that this creates more of a problem than if they had been on a lower income, as they are now facing more of a drop.

Surely if many of them had thought ahead just slightly they could have put something aside until they had built up a bit of a contingency fund for a 'rainy day' ?. I know people generally tend to spend up to their income level, but do people nowadays think that they are personally immune from redundancy, job loss, illness, flooding etc ?

I can appreciate it's an awful situation for them to be in and that saying 'well, if you were earning that much why do you have no savingsto see you through' isn't helpful after the event, which is why I don't post it on the inidividual threads...

.. so I've just come over here to have a bit of a rant / sigh of despair/ issue a warning instead....

Roman1_2

I agree entirely p00hsticks and have been thinking along the same lines for some years. A similar argument would apply to private pension provision where millions of people have no private pension in place and will be forced to rely on the ever dwindling state pension.

tomtontom

Another in agreement, and even for those on a limited budget it is often possible to put something aside. A friend who earns far more than me cannot understand how I can have money in the bank when she doesn't - simple, I don't have my hair done every month or go out every weekend. I no doubt come across as tight but am far more comfortable knowing I've got a buffer should anything go wrong.

lost_for_words

100% agree. Warning to you people out there you will soon be pensioners and wished you had done what the op has stated. Facebook's full of people stating that their hols are booked and then come back and plead poverty because they have no reserves. Sadly many do this. And this is not pointong to those who are doing everything possible to make ends meet.

mttylad

I am almost 50 and on a reasonable wage.

However I cant afford to put away what I am being told to put away for a pension. The £200-300 I am told is the minimum I need to put away is just too much. £30 a month maybe - but then what will that do for me when I retire? Sod all really as it will be too little.

I'd rather enjoy myself while I can.

w211

It's the reason why I was advised to start a pension as soon as possible. I started one at 18, when I was still at college and had a Saturday job. Even though I started off at "only" £20 a month, every little is going to help.

ky822000

OK, hands up, you could probably be talking about me. I went bankrupt 3 years ago after a flood in my business premises (with live in accommodation).

My previous foray into pensions did not go well because I swapped jobs a lot in this 'brave new world' of job mobility instead of a 'job for life' and I have ended up with a company pension from a company that has now been dissolved which is worth about £150 and would cost more to move than let it be eaten up by charges, and pensions with LGPS and NHS which will pay about £200 per year each on retirement.

My plan now is to pay off the approx £15k debt we have between us (my partner was terrible with money before we met, and some debt was necessary to move to a new house when I lost the business). This should be cleared over the next two years and then we plan to save hard for a mortgage. I have calculated that without rent (if we can pay off the hoped for mortgage before retirement, as planned) then we will be able to live comfortably, albeit frugally, on the state pensions we will both have earned.

Hermia

I remember the Evening Standard once ran an article on savings and interviewed people earning from (I think) £50k to £500k and they all said they could not afford to save any of their salary.

I think upbringing has a lot to do it. I remember even when times were good my parents would say you never know what happens around the corner.

I think this attitude leaks into other areas of life too. I have had friends ring me up in a panic because they are snowed in and have no food or are ill and have no medication in the house. It's not because they are too poor to stock up, but because they just never think about the future.

Torry_Quine

I'm another one who agrees that too many people only think of the very short term. If someone has just lost their job then not even being able to pay the next months regular bills seems very strange to me.

I think that saving something for a rainy day should start as soon as you start to earn money and be a habit. Only if you have money put by should luxuries be considered.

Sharon87

The problem is this:

Person graduates, gets a job moves into a house share
Person gets promotion - lives by themselves or with a partner. Rent goes up
Person gets promoted, gets a mortgage. Paying even more for mortgage (or move to a bigger house)
Person gets made redundant... can no longer afford the mortgage (or increased rent)

So they're increasing their outgoings when their salary goes up. Cause face it who wants to live in shared or small accommodating in their mid 30s onwards!

Savings are good if you have some spare but to save up 6 months worth? That's very difficult to do. I could potentially save a couple of months wages or at least 2 months living costs in about a year. But I'd rather pay it towards my credit card!

jaylee3

p00hsticks wrote: »

But why do so many people on a reasonable wage seem to regard their monthly salary as a target to spend each month and not pay any attention to the advice about having a 'rainy day fund', ideally of at least six months salary ?

In an ideal world, this having six months salary in the bank to 'fall back on,' would be a thing poohsticks. However, this is not a perfect world, and your 'ideals' are not doable for many many people. I also don't know anybody that regards their monthly income as a target that they MUST spend!

Realistically, it's rather more difficult to put it into practice to have 6 months salary in the bank - and keep it there. There is ALWAYS going to be stuff that you need/want that costs more than the 'spare money' from your wages.

If you own your own property/have a mortgage, there are always going to be repairs and maintenance to worry about, or a new kitchen or bathroom or windows or boiler. Nobody is going to have the multiple 1000s that these things are going to cost, so people take loans and finance, and this eats into any 'surplus' they may have.

Add to that, paying for every other 'life' thing: children, student loans, a wedding, a new car, your kids weddings, a few holidays, and general living, and you've not got much left.

The days are gone of good wages and low house prices and free uni fees and suchlike. Times are tough, everything is expensive, from house prices to car prices, from food to petrol, and most people have some kind of debt or finance.

I'm afraid life with 10 grand snuggled away in the bank for a 'rainy day' with no debt and a shedload of surplus dosh is a mere pipedream for many. And yes, a massive amount of people DON'T have lots of surplus cash. Some it is because they have squandered it on holidays and stuff, but mostly it's people who genuinely struggle month to month to make ends meet.

Sorry OP, but I think I find your post very naive. You are either very lucky, very wealthy, or very spoilt. Or possibly all three. And I am guessing you are of the older generation (ie; born before 1960.) I guess that because I don't know a single solitary person under 50 who would agree with your points. I am sure you know many though.