Why don’t people manage their finances better?
Discussion
Ok, so I may get flamed for this, but I find myself getting increasingly perplexed that so many people seem unwilling or unable (big difference clearly) to manage their finances in such a way that they have some margin to enable them to cope, at least to some degree, when circumstances change.
I appreciate that some living hand to mouth do so out of absolute necessity but I would guess that there are many more that just live to their means without care or thought as to what happens if something materially changes. Surely if there’s one thing history has taught us, it’s that things change, but people seem keen to ignore or forget this.
I’m not a high earner and have kids to support, but I’ve always tried to put a little aside, often going without in order to build in a little security for myself. When times have been reasonably good I’ve never assumed it’ll last forever and, again, have sought to build a little margin. I might be old fashioned or out of touch, but a quarter of adults having less than £100 in savings just seems bonkers.
I might add that I appreciate rising interest rates, utility bills and general inflation will understandably strain the majority of households, and I’m not talking about an inability to comfortably cope with this scenario; more an apparent inability to cope with almost any negative deviation in their finances.
Is this just a case of cheap credit and assuming the good times will never end? Should more be done to educate people about managing their finances? Again, my thoughts are clearly aimed at those that don’t / won’t rather than those that can’t. Should such people expect financial (government?) help if they’ve done little to nothing to protect themselves?
I appreciate that some living hand to mouth do so out of absolute necessity but I would guess that there are many more that just live to their means without care or thought as to what happens if something materially changes. Surely if there’s one thing history has taught us, it’s that things change, but people seem keen to ignore or forget this.
I’m not a high earner and have kids to support, but I’ve always tried to put a little aside, often going without in order to build in a little security for myself. When times have been reasonably good I’ve never assumed it’ll last forever and, again, have sought to build a little margin. I might be old fashioned or out of touch, but a quarter of adults having less than £100 in savings just seems bonkers.
I might add that I appreciate rising interest rates, utility bills and general inflation will understandably strain the majority of households, and I’m not talking about an inability to comfortably cope with this scenario; more an apparent inability to cope with almost any negative deviation in their finances.
Is this just a case of cheap credit and assuming the good times will never end? Should more be done to educate people about managing their finances? Again, my thoughts are clearly aimed at those that don’t / won’t rather than those that can’t. Should such people expect financial (government?) help if they’ve done little to nothing to protect themselves?
t hits fan, government will continue to bail out the financially inept with Other People's Money. Repeat ad infinitum.If you are of average intelligence, then half the population are less intelligent than you are. Even some supposedly intelligent people burn their way through everything they have each month, with no thought for emergencies. Intelligence and common sense are not necessarily the same thing.
The current rise in interest rates is going to catch a lot of people out who are too young to remember the double digit mortgage interest rates of the early 1990s.
Building up a 'F**k you fund'* makes so much sense, but few people bother to do it.
The current rise in interest rates is going to catch a lot of people out who are too young to remember the double digit mortgage interest rates of the early 1990s.
Building up a 'F**k you fund'* makes so much sense, but few people bother to do it.
- So called, because if you have a few months money behind you to cover mortgages etc., its a lot easier to tell you boss to 'do one' if he gets unreasonable.
For those who have the luxury of the decision, I wonder how much of it stems from us all being encouraged to live for the moment. Seize the day. YOLO etc. in the last few decades.
It's a balancing act isn't it. There's not a lot of point sacrificing your enjoyment of life now to save for a future you may never have, but then you don't want to burn out too quickly and end up struggling later. I suppose we're all somewhere between those two extremes.
It's a balancing act isn't it. There's not a lot of point sacrificing your enjoyment of life now to save for a future you may never have, but then you don't want to burn out too quickly and end up struggling later. I suppose we're all somewhere between those two extremes.
Vasco said:
They're not over bothered. The assumption is that the government/anybody will bail them out.
They are probably right. I read last week the Lib Dems would bail people out of increased mortgage payments! Absolutely nuts. We are very much like the OP savers rather than spenders.
BoRED S2upid said:
They are probably right. I read last week the Lib Dems would bail people out of increased mortgage payments! Absolutely nuts.
We are very much like the OP savers rather than spenders.
Well they’ll never be in government so they can afford to promise anything until they are.We are very much like the OP savers rather than spenders.
wormus said:
BoRED S2upid said:
They are probably right. I read last week the Lib Dems would bail people out of increased mortgage payments! Absolutely nuts.
We are very much like the OP savers rather than spenders.
Well they’ll never be in government so they can afford to promise anything until they are.We are very much like the OP savers rather than spenders.
grumbledoak said:
The population is kept financially illiterate so they will be lifelong consumers and debt slaves. Not much point asking why they then act as such.
Really? - not sure how people are being kept financially illiterate ?All of the information is readily available - it's more that too many people can't be bothered and expect others to do everything for them.
Too many lazy people out there.
wormus said:
Those German whips won’t pay pay for themselves. It’s all about the monthlies.
German whips...I like to change my car every two years for something completely different but still either a hot hatch or sports coupe. People at work always ask why I do it and how can I afford it. Well, I budget very well every month and unlike some of them, I don't sit on my phone all day gambling online roulette and getting into debt to the point they lose their family home and end up in a mid 90s Micra.
750turbo said:
Budgeting - Do many people actually do this? It should be a subject at school.
I have used MS Money for years and it works a treat, always know exactly where I am.
Exactly this ,the world is an ever changing and challenging environment and we should be teaching kids the basics of economics,I don’t think understanding how Shakespeare came up with Hamlet is really a useful life skill… I have used MS Money for years and it works a treat, always know exactly where I am.
GliderRider said:
Building up a 'F**k you fund'* makes so much sense, but few people bother to do it.
This is the most important thing. The feeling of safety (and slight smugness) can not be overstated. - So called, because if you have a few months money behind you to cover mortgages etc., its a lot easier to tell you boss to 'do one' if he gets unreasonable.
Back to the OPs question, I can't offer an answer directly, but I did read an article recently claiming some people who had taken out PCP contracts did not realise they had a balloon payment at the end. I bet that came as a surprise to them.
wormus said:
Those German whips won’t pay pay for themselves. It’s all about the monthlies.
You joke but everyone stretches themselves to get the best house that they can afford. The same with cars, holidays. It's the mortgage rate rises which will unpeel everything.
The Liberal Democrats were asking for aid for people to pay their mortgages. What next, aid to pay for the Audi SUV 30 TDI thing also?
I don't have much in the way of savings, and suppose i 'live for the moment '.
But I have a nice house, and am otherwise not that extravagant. Probably got 250-275k equity in the house, so if it goes very wrong, il be ok. If it goes a but wrong, I can sell my car (which I have a loan for) and free up 10k very easily.
Not sure how having, say 25k saved would really help me? Too much for if I was made redundant, and took a few months to sort,but not enough if something life changing happens.
I suppose I would feel a bit better if I had 5k saved, but with 3 kids, there is always some other demand on the money.
But I have a nice house, and am otherwise not that extravagant. Probably got 250-275k equity in the house, so if it goes very wrong, il be ok. If it goes a but wrong, I can sell my car (which I have a loan for) and free up 10k very easily.
Not sure how having, say 25k saved would really help me? Too much for if I was made redundant, and took a few months to sort,but not enough if something life changing happens.
I suppose I would feel a bit better if I had 5k saved, but with 3 kids, there is always some other demand on the money.
Edited by covmutley on Monday 7th November 20:10
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