Are earnings too low / living costs getting too high??

Vonhelmet · 23 Apr 2017 at 18:14

Ayahuasca said:
The thing with this though is I think it works both ways if more millennials moved out and gained some independence and knew the struggle of supporting yourself would it not push them to earn more money?

Telling people you still live with parents in your late 20's and early 30's will already have an effect on your mental wellbeing, whilst people may not be bothered or might not even know it can have a huge effect on your confidence and self-worth.

I think it's far too easy to just stay at home and say "I can't afford to move out", but I think many people (outside of London and certain southern areas) who say that actually could if they made a little sacrifice to their spending habits, gained some independence and then pushed on to make living independently more comfortable. I don't think that drive is there when you can have it easy and live at home and coast through life till you have savings for a deposit, especially when many aren't even saving properly and clubbing every weekend or buying new shiny things to keep up with whoever etc etc.

Having worked in an office with a bunch of school leaver apprentices earning £20k and living with their parents I can confirm that they are useless with money and happy to live at home and live it up with all that cash and no expenses. The one guy we had who was saving like mad so he could move out was mocked because he wasn't out all the time.

rogan · 24 Apr 2017 at 09:47

Vonhelmet said:
Having worked in an office with a bunch of school leaver apprentices earning £20k and living with their parents I can confirm that they are useless with money and happy to live at home and live it up with all that cash and no expenses. The one guy we had who was saving like mad so he could move out was mocked because he wasn't out all the time.

But why remove yourself from enjoying life to spend all your time saving to move out, and then living in squalor moved out because all your money is going on bills?

I don't blame any young people on <£20k these days for living at home with no immediate aim to move out, cost of living with current rent is so high for a completely bland lifestyle.

If I had the choice between my parents house, a holiday a year and a social life vs a crappy shared flat, beans on toast and netflixing myself into oblivion, I know what I'd be picking

Vonhelmet · 24 Apr 2017 at 09:51

And if I were the parent I'd be charging the kids a market rate rent, but that's been argued over here before, and some would say that makes me the ******* to end all ********.

grudas · 24 Apr 2017 at 09:58

Vonhelmet said:
And if I were the parent I'd be charging the kids a market rate rent, but that's been argued over here before, and some would say that makes me the ******* to end all ********.

Depends what is worth for you more, the 300 or so you gunna earn a month from you kids paying you rent or your kids putting money to good use and not paying you, say, saving for a deposit - I agree splashing all their earnings out and not helping at all is not something I agree with but I'd rather my kids put the money to deposit and moved out into their own flat after buying and not sit there for years paying rent and hoping for a holiday.

Vonhelmet · 24 Apr 2017 at 10:02

grudas said:
Depends what is worth for you more, the 300 or so you gunna earn a month from you kids paying you rent or your kids putting money to good use and not paying you, say, saving for a deposit - I agree splashing all their earnings out and not helping at all is not something I agree with but I'd rather my kids put the money to deposit and moved out into their own flat after buying and not sit there for years paying rent and hoping for a holiday.

Plot twist: I put the "rent" in a savings account and save it for them.

Zatoichi.uK · 24 Apr 2017 at 10:03

That's exactly my plan for my daughter. It's gets them used to some of the expenditure and eventually gives them a lump sum to use for a down payment.

grudas · 24 Apr 2017 at 10:05

Vonhelmet said:
Plot twist: I put the "rent" in a savings account and save it for them.

was half expecting that

as long as they know! imo if you charge the market rate and they assume that it is going to your pocket it'll motivate them to move out which will backfire, saving for a deposit is the difficult part. I need around 35-40k saved before I can consider looking for a property. That'll take a while

The_Abyss · 24 Apr 2017 at 11:06

Really interesting article on the BBC via the IFS over the weekend.

http://www.bbc.co.uk/news/uk-39519844

It looks at the different challenges faced by different generations, comparing those born in the 50s, 60s, 70s and (early) 80s. It is a pity that the analysis stops there, as it would have been fascinating to extend the data to early 90s.

Some highlights have already been shared / discussed here, including the fact that those born in the 80s are the first generation post WW2 to not see their average incomes rise compared to the previous generation. It also shows the steady decline in home ownership and average wealth by a certain age. On the plus side, the wealth of the previous generations is slowly coming down the line, albeit to the benefit of the wealthier.

Rroff · 24 Apr 2017 at 11:16

I find it funny that a generation that through largely self interest has made it increasingly harder for young adults to take their first steps into independence are also often very eager, and more eager it seems that the generation before or after them, to get rid of them once they become adult aged.

Vonhelmet said:
And if I were the parent I'd be charging the kids a market rate rent, but that's been argued over here before, and some would say that makes me the ******* to end all ********.

Not sure I agree with treating an adult like that whether your kids or not aslong as they are making a reasonable contribution to household costs whether you agree with their spending habits or not.

Vonhelmet · 24 Apr 2017 at 12:02

Rroff said:
Not sure I agree with treating an adult like that whether your kids or not aslong as they are making a reasonable contribution to household costs whether you agree with their spending habits or not.

Once they're adults they need to start doing adult-y things, like paying their way. I'm not having my kids living it up at home earning £20k+ with my paying for everything. I was out and renting by then, they can figure it out or pay me.

FWIW, I'm 35, so I'm the generation that got buggered, not the generation enjoying doing the buggering.

nightwish · 24 Apr 2017 at 12:27

Vonhelmet said:
Once they're adults they need to start doing adult-y things, like paying their way.

I completely agree, but if you're just saving it on their behalf, aren't you essentially taking responsibility for managing their money, and thereby, not really treating them like adults?

I figure if you give your kids as much responsibility for their money as possible, from as early as possible, then hopefully the right attitude will have coalesced long before they're old enough to move out. (In theory!)

HangTime · 24 Apr 2017 at 12:43

Telecaster said:
I have no idea what a childless couple on £28k each are doing if they're struggling...

Most likely they are spending money on non-essential items and/or expecting to live in an 'expensive' property relative to their income (in most cases this is driven by a desire to live in a certain area typically close to friends/family/work etc). There may also be some more fringe cases where they have to support others (e.g. elderly relatives) or have built up large debts when they were earning less money. I think there is a tenancy to focus a bit too much on income when looking at 'affordability' as someone on a lower income with much higher net savings may be in a better position.

Rroff · 24 Apr 2017 at 12:49

HangTime said:
or expecting to live in an 'expensive' property relative to their income

I find this often the case when acquaintances talk about struggling - earning a reasonable amount but nothing particularly above average but expecting to be able to live in a 5 bed detached with a double garage, etc. :s which is kind of a lot of the point of this thread I'd have a lot more sympathy if they were looking at say a 2-3 bed semi-detached near to friends/family and still couldn't afford it realistically.

SpeedFreak · 24 Apr 2017 at 12:50

Vonhelmet said:
Having worked in an office with a bunch of school leaver apprentices earning £20k and living with their parents I can confirm that they are useless with money and happy to live at home and live it up with all that cash and no expenses. The one guy we had who was saving like mad so he could move out was mocked because he wasn't out all the time.

An anecdote but we have a DC Pension Scheme where the employer pays 14% to your 7% contribution. A new grad working for me "couldn't afford" to pay into their pension despite earning over 30k having earned zero at uni the year before. Interestingly they could afford to go on holiday to Thailand and Cambodia for three weeks.

ci_newman · 24 Apr 2017 at 13:16

nightwish said:
I completely agree, but if you're just saving it on their behalf, aren't you essentially taking responsibility for managing their money, and thereby, not really treating them like adults?

I figure if you give your kids as much responsibility for their money as possible, from as early as possible, then hopefully the right attitude will have coalesced long before they're old enough to move out. (In theory!)

The easy solution there is to not tell them that it's being put into a savings account - then when / if they need a large sum of money you can gift it back to them as a surprise. That way, they are learning financial independence whilst still being cared for by the parents.

HangTime · 24 Apr 2017 at 13:20

Rroff said:
I find this often the case when acquaintances talk about struggling - earning a reasonable amount but nothing particularly above average but expecting to be able to live in a 5 bed detached with a double garage, etc. :s which is kind of a lot of the point of this thread I'd have a lot more sympathy if they were looking at say a 2-3 bed semi-detached near to friends/family and still couldn't afford it realistically.

This is where we perhaps differ slightly I think - in my eyes wanting a semi-detached house near friends and family is not necessarily realistic if the friends and family live in an expensive area. Many 3 bed semis are more expensive than 5 bed detached houses in different locations. You often see people complaining about house prices "in my area" which in itself is perhaps a pointer that they may need to consider changing their area.

^^regarding the pension thing, it is a real shame that many youngsters (heck, many people full stop) don't see the massive benefit from such schemes. There can't be many investments where you pay in £x, someone else puts in £2x so you've tripled your money even before it gets invested, oh and you can claim tax relief on the contributions as well.

Rroff · 24 Apr 2017 at 13:24

HangTime said:
This is where we perhaps differ slightly I think - in my eyes wanting a semi-detached house near friends and family is not necessarily realistic if the friends and family live in an expensive area. Many 3 bed semis are more expensive than 5 bed detached houses in different locations. You often see people complaining about house prices "in my area" which in itself is perhaps a pointer that they may need to consider changing their area.

That is part of why this thread exists though - that is a fairly average house but in increasing numbers of areas someone on a fairly average wage will be priced out.

Nasher · 24 Apr 2017 at 13:29

Much of the current generation is living off the wealth of the post war generation, when everything was cheap in relation to wages. Not a good way to run an economy.

London is the worst. Most of the workers (not the rich people) living in London have owned their houses since before the prices went crazy. But they are slowly moving out or retiring and the ones replacing them can't afford (or want) to live in London. There is GOING to be a crash and a worker shortage there eventually, no avoiding it now.

HangTime · 24 Apr 2017 at 13:33

OK - but to me that is just something we have to expect, especially in a nation where our population is increasing faster than we are building properties (weighted for household size). Areas that used to be affordable may no longer be affordable on an average wage isn't in itself something that I think we have to change - perhaps it implies we should be making better use of our landmass and seeking less disparity in prices by location. Obviously, there will always be disparity (if nothing else due to proximity of resources, climate differences etc) but as telecomms continues to improve there is maybe an opportunity depending on the industry to spread our work force a bit more compared to focusing on large urban centres.

nightwish · 24 Apr 2017 at 13:34

ci_newman said:
The easy solution there is to not tell them that it's being put into a savings account - then when / if they need a large sum of money you can gift it back to them as a surprise. That way, they are learning financial independence whilst still being cared for by the parents.

By 20, they are adults and should have learnt financial independence already, albeit with smaller sums. At that point (to my mind) you shouldn't be messing them about like that, not on something as significant as a house deposit. I want to be a straight shooter with my kids, so they can talk to me and trust me.

I'm not judging though - there is no right answer, and I don't have kids yet, so I don't have to deal with the practicalities!