'Life savings' - do people still have them?
Discussion
Years ago the term 'life savings' was fairly common. 'He lost his life savings in the stockmarket crash', or 'they used their life savings to buy that new car' or 'the pensioner was conned out of his life savings'.
The thing is, no one I know seems to save any more. If you want something, a new car, a boat, an extension, it doesn't come out of savings, you just finance it. People seem to live to their means, if they have any spare cash it goes on 'lifestyle' or holidays, or a deposit for that new four berth caravan.
So has the mindset of years of careful saving, slowly accumulating a nest egg gone? Is the idea hopelessly outdated?
The thing is, no one I know seems to save any more. If you want something, a new car, a boat, an extension, it doesn't come out of savings, you just finance it. People seem to live to their means, if they have any spare cash it goes on 'lifestyle' or holidays, or a deposit for that new four berth caravan.
So has the mindset of years of careful saving, slowly accumulating a nest egg gone? Is the idea hopelessly outdated?
I don't like finance, mainly because I'm tight and don't want to pay an extra 20% or whatever to have something now rather than wait a while. The exception being a mortgage but I've now got over half the amount of my outstanding mortgage as savings (better interest rate on savings than mortgage). Plan to blow it on a bigger house though so not exactly life savings 
"Life savings" are not savings for a specific purpose, so it isn't that people are no longer saving for things like cars - they may not be, but that was money put aside for spending and in that sense it doesn't make much difference whether their two or three hundred a month is put into a savings account and emptied periodically or paid into a lease or loan repayment.
Life savings are a hedge against uncertainty. People who have low expectations of life don't need to save - the state will provide a basic standard of living, and indeed will hold off helping until their savings are gone or substantially reduced. So their security is assured. People with higher expectations tend to gain security through other risk based financial products - pensions, insurances - and home ownership.
Over the last couple of generations, the proportion of people who own a house and the amount of capital tied up in each house have increased dramatically.
Life savings are a hedge against uncertainty. People who have low expectations of life don't need to save - the state will provide a basic standard of living, and indeed will hold off helping until their savings are gone or substantially reduced. So their security is assured. People with higher expectations tend to gain security through other risk based financial products - pensions, insurances - and home ownership.
Over the last couple of generations, the proportion of people who own a house and the amount of capital tied up in each house have increased dramatically.
The cost of mortgage in interest payments far outstrips any interest on a savings account, would be cheaper paying part of the current mortgage off with savings if you have no other use for it.
With regard to original question, people do still have life savings and this would lots of different types of financial products but IMHO this would not cover pensions but this has become more complicated. Before the government changed the rules you couldn't get access to your pension savings so I wouldn't class them as 'life savings' because you couldn't doing anything else with them.
With regard to original question, people do still have life savings and this would lots of different types of financial products but IMHO this would not cover pensions but this has become more complicated. Before the government changed the rules you couldn't get access to your pension savings so I wouldn't class them as 'life savings' because you couldn't doing anything else with them.
gottans said:
The cost of mortgage in interest payments far outstrips any interest on a savings account, would be cheaper paying part of the current mortgage off with savings if you have no other use for it.
Oh no it doesn't (sorry, bit to early for panto season?) There's loads of people who took out mortgages when rates were higher that reverted to a small amount above base rate at the end of the term, banks didn't expect rates to go so low, I know a couple of people paying less than my 1.49% Obviously interest rates on savings have fallen too but there's still ISAs paying more than that and you can even get 3% (pre tax) on a current account bertie said:
Where????
Genuine question.
TSB have a 5% current account (up to 2k). I have two of them (max you can have) and get around £16 a month interest in total.Genuine question.
Tesco have started a 3% current account as well.
I have savings, wouldnt call them life savings though as they are for a house. I only take out credit when its interest free.
No. I lost everything I had other than the clothes in the wardrobe and a car a few years back from redundancy, couldnt find work for a while and chewed through all the money I had, then a bit more as well.
Slowly repaying debts, and once they're complete I'll be able to save again to build up a bit of a buffer. I'll never have life savings, I dont have a pension, and I dont own property so I'll pretty much be working til I keel over unless something happens
With that said though, I dont have a bad life. About to get married on the cheap with help from family, moved back to my home town, still have my little Quantum and work is picking up. Seeing things like 'would you have a nice car or nice house' puts into perspective that at the moment, I'll have neither, but neither are particularly important to me
Slowly repaying debts, and once they're complete I'll be able to save again to build up a bit of a buffer. I'll never have life savings, I dont have a pension, and I dont own property so I'll pretty much be working til I keel over unless something happens
With that said though, I dont have a bad life. About to get married on the cheap with help from family, moved back to my home town, still have my little Quantum and work is picking up. Seeing things like 'would you have a nice car or nice house' puts into perspective that at the moment, I'll have neither, but neither are particularly important to me
I don't have life savings so much as savings.
I have the odd ISA, the odd bit in stocks and shares and a few other investments such as a few art works and a few cars I have an interest in.
I consider my main savings though to be the account where I hold enough money to keep my little world turning to some degree for 6 months and the cash in there over and above that which is used for service bills, new washing machines, etc.
I have the odd ISA, the odd bit in stocks and shares and a few other investments such as a few art works and a few cars I have an interest in.
I consider my main savings though to be the account where I hold enough money to keep my little world turning to some degree for 6 months and the cash in there over and above that which is used for service bills, new washing machines, etc.
I put money away for the kids so they ought to have enough for a uni education should they want to do travel that route. There's also a kind of family tradition to provide a modest house deposit for each child but uni costs may eat into that ambition a bit, -we'll see in a decade's time...
We're also fortunate that my Mrs can buy into her company share scheme and we'd be stupid not to do that. Should have a lump of capital coming along as long as the share price doesn't crash.
I still bump into my overdraft limit from time to time though. Aldi beans anyone?
We're also fortunate that my Mrs can buy into her company share scheme and we'd be stupid not to do that. Should have a lump of capital coming along as long as the share price doesn't crash.
I still bump into my overdraft limit from time to time though. Aldi beans anyone?
RizzoTheRat said:
Oh no it doesn't (sorry, bit to early for panto season?) There's loads of people who took out mortgages when rates were higher that reverted to a small amount above base rate at the end of the term, banks didn't expect rates to go so low, I know a couple of people paying less than my 1.49% Obviously interest rates on savings have fallen too but there's still ISAs paying more than that and you can even get 3% (pre tax) on a current account
I'm not sure that really stacks up for most people. If you're paying 40% tax on interest received (while you're wife isn't, I suspect most people with substantial savings are in the 40%+ bracket) then you need to earn 2.5% to breakeven on a 1.5% mortgage. The key problem most people will face is that there's typically a cap (as you note) on the amount of money that you can earn more than 2.5% on, and Santander's limit of 20k is pretty generous in the market. On a 20k mortgage, the 50bps spread will earn you £100/year, which while good for a night out, isn't quite life-changing.Four Litre said:
I thought the rule of thumb was to save up 3-6 months wages. Especially when you have dependents etc.
Of course the 'Cash is King' directors would have a lot more as well!
I think that makes sense, having a pool of liquid funds available for emergencies seems like a good idea.Of course the 'Cash is King' directors would have a lot more as well!
Gassing Station | Finance | Top of Page | What's New | My Stuff