h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

On a recent stag-do-weekend away with some friends of a friend of 30+ years, I felt like the odd-one out due to my financial situation.

I have only once in my life been in the position to save money; I was in a job which paid for extra time worked (every job I've had since does not- they operate a time in lieu system). Therefore I worked an extra day per week (6 days) for a year and saved enough for a deposit on my first home. This was back in the days when it was possible to save the required 1-2% deposit from a lowly retail job, albeit by working an extra day.

I have never at any other time, earned enough to save a regular meaningful amount so I don't even try. I know people say that it's good to save any amount, but honestly; if I had, over the years, saved every spare few tenners I had at the end of the month... I'd have a few hundred pounds by now, which would be wiped out by the next car repair or unexpected bill. It's no different to just adding the spare amount into the next wage.

Anyway, the other 9 people on this stag-do were, i could tell by their jobs and conversations, very likely to have plenty spare cash stashed away. I know for a fact that my friend has been saving since his first jobs. He now goes away for short or longer breaks every month and is obviously not shy at spending money.

I found it hard to relate to anyone present, as the basic foundation of our lives are different. I have found, that only people with money ever come out with those blithe untruths about money not being important to them/ money doesn't buy happiness/ poor people are often happier than rich, etc, etc . It's very easy to think those things when you aren't living from wage to wage and spending half of every month literally counting the days till the next payday. These poeple seem to think that just because they haven't been into a shop or pressed 'buy' on their screen for a while, that money isn't a big deal to them and they could survive happily without a financial cushion. I think not.

Does anyone have any observations of times they've been in a similar situation? Maybe you were the opposite to me; maybe you were the only well-off one in a room of 'payday to payday' livers'. Were you aware of any awkwardness in conversations? Did you try to downplay any mention of spending money/ not being able to spend money?

I was never able to save anything until my current job. Even then it was a while before I was able to build up a buffer amount of liquid savings.

But no matter how tight your situation, you should try to put something away.


I highly recommend picking up a paperback or E-book version of _The Index Card_ by Harold Pollack.
( http://www.forbes.com/sites/zackfriedman/2017/03/09/9-money-rules-index-card/#4a1d21a12c09 )
Also buy extra copies to give away to friends and relatives. (Check at used bookstores.)

I wish I had read this book decades ago. It wasn't published then, but I still wish I had.

This might be small comfort to you this late in the game, but really small amounts invested when you are quite young can compound to astonishing levels even if you never again get a chance to save any money. It's too late for this information to help you, and I'm sorry about that.

You're in a boat with a lot of other passengers, I'm afraid. A few people can invest small sums and let time turn them into large sums. Most of us can't do that, sadly. If we have small amounts of savings, we don't have good places to put them. In the U.S., too many people are expected to save for retirement, but without any guidance whatsoever. This can't end well.

Again, I am so sorry.

I have always been a decade or more behind my peers.. I only worked out (roughly) what I 'want to be when I grow up', 4 or 5 years ago when I went back to study to 're-tool'. Consequently, I'm currently at the career stage now that I should've been at in my 20's. I wasted years and years bumbling about in dead-end jobs in sectors that did not interest me. I might be earning enough to save a meaningful amount, when it's just about time to retire...

I also was very late in starting pensions; in my late 30's instead of in my early 20's...

Basically, I would be absolutely fine if I had a 200 year lifespan.

Rather late in my working life, I did find enough to tuck a small amount each month into a registered retirement savings plan. And then comes the end of March 2011 - and our work contract fell apart. I was without salary for most of 11 months, which is not a good thing when my income was the lion's share of mortgage and bills. Those savings got eaten up pretty quickly, and lines of credit took some serious beating.

By 2014, I was just beginning to get a small nest egg again . . . and my heart failed. Out of the work-force permanently. It was again several months without any income until some disability support began. Which means that once more, the 'buffer' was eaten up. And my fixed income now leaves nothing at all to "save".

It's a dark way to look at things, but it is perhaps fortunate that I probably have under a year left to live. At the moment of my demise, insurance pays off the house entirely - leaving my 'widow' with the option of selling it free and clear. Also, there are enough death benefits from various past employments as well as a lump of life insurance - my widow will be pretty well set for the rest of her natural life.

Late 30s/early 40s is not too late for you, Winnoch. Good advice, of course, has no down side. Good luck!

I think you touched on a sore point in the educational system in post 3, Paulh.

If it were up to me, we'd beef up money management, insurance and retirement in secondary schools home economics and make the course mandatory for everyone.

I've saved all my life... since a child... - If I wanted something, I had to buy it.... if I wanted to buy it, I had to save up the money for it... and, I guess, just getting into that habbit early on, I stuck to it... - I've still got a regular savings direct debit, I set up when 18 years old, that has continued, in-interrupted... To be honest, I've no idea how much is in that account, but its had £20 per month go into it, for ... *counts* ... over a decade now - other things, I've only ever spent and bought stuff, paid for home improvements, repairs, etc, when I've had the cash to do it... - hence over my lifetime I guess I've saved a decent amount of cash, as I've never paid interest on anything, and despite having an overdraft (I never requested it), since university, I've never yet had to use it - My credit card is merely used as a debit card, as each month a direct debit pays off the full amount, ensuring I've never paid any interest on that either
Guess I'm tight, or over-cautious in some ways; I came into a small amount of money, in my early 20's, and now, in my early 40's, subtracting from that amount the money I spent on the house, etc, means I've still got the remainder, intact, in a building society account, and a ISA account
I was lucky I got a house when I did... I'd never afford one now, the prices are just out of all sembelence of comparison to wages, or the costs of other aspects of living...

Heck, I bet if I could find it, I've probably still got some left in my old national savings (post office), book, back from when I was a kid... - though actually I spent a fair wodge of that savings, on a very good pair of hiking boots, which, in proof absolute as to how tight I am; I still have and wear, today, err.... 26 years later

To the current day, we spent some money doing the house up, a few years back; only now I am ready for the next stage, as the amount spent at that time, has subsequently been resaved (well in the current account), so we can move on to do the bathroom... and at some point get round to creating a working kitchen that isn't collapsing to pieces

Yes, I've been lucky enough to be able to save as well - social security is just about there in the UK if youpre desperate, but I know my financial cushion is important; having savings does give me much more choice and flexibility, especially as a disabled person.

My grandparents gave me a bank account with a small amount of money in it when I was born, so I got into a good habit from an early age too - over the years I added to it with savings from my pocket money, plus there was a reasonable amount of interest on the account in those days so it mounted up. I was able to put a deposit on a house after I came into some money and added it to the account as well, and now I'm very fortunate to have a job that pays me a wage that is enough for me to live comfortably on with some left over.

Teaching more about money in schools would be a good idea indeed - someone mentioned to me the other day that the advent of more electronic forms of payment mean their children aren't understanding the concept of 'having none left', like they would if they had spent all their coins, so that is something to be aware of...

Saving can be tough. When I was in the Army, I set some aside. I was able to buy my fist two cars with cash. I never had much savings after that.

From my time in law enforcement, I have a partial pension that I start collecting at 55. My wife has some kind of pension from being a teacher.

We're on a short term contract in the South Pacific. Part of the reasoning was that even though we took a big hit to income, we should be able to drastically reduce expenses. It should work great, but our house in the states hasn't sold. Once we don't have a mortgage and utilities to pay up there, we should be able to start making headway.

It's a pretty drastic change. We sold or donated almost everything we owned, but for long term finances and other reasons, I think this will work. We'll see.

Hi Win,

What you describe about the attitude of your fellow stag-doers I see as prevalent in colleagues and my family members of a certain generation. My children's age-ish. I am constantly gob-smacked by the amount of money that they seem to spend on things like stag dos. My SD was a night down the pub with my mates.

A young woman I work with recently had to pull out of a hen do and wedding as the cost of the hen do in London, The weekend away in Spain and the demands of the wedding (specific hotel and wedding outfit) saw the cost to her rise to close to £2,000. She pulled out, suffered the wrath of the woman getting married but others didn't and spent the money.

A friend had a stag do involving flights from the UK to Eastern Europe, hotels over there, a trip to a firing range to fire AK47s etc. The demands on that (your?) generation hare huge.

There are so many things that we didn't know we needed 30 years ago. Coffee to carry around with us? Massively powerful mobile phones (anybody want to land a space mission on the moon using the computing power on my phone over and above that which I use?), branded clothing (with huge mark-ups (but it's got the swoosh / three stripes / whatever so that's ok then).

And house prices! Don't get me started...... Many young people don't stand a chance.

PP.

"I am constantly gob-smacked by the amount of money that they seem to spend on things like stag dos. My SD was a night down the pub with my mates."

Yes! This was me; my stag do 10 years ago was also just a few pints in a favourite pub with a few pals including the one who put on the stag do of which I spoke, a couple of weeks ago.

In fact that was just the first of his two doo's with the 2nd one coming up a couple of weeks before his wedding and being closer to what mine was (albeit with more people and food laid on, etc...)

It seems that a stag is not worth 'dooing' now if it doesn't involve multiple facets and sub-events across more than one day, including the now-obligatory adventure type thing This one was off-road driving. Fun yes, but for a stag do- really ?

my stag/hen was a weekend alcohol free in a nearby spa-hotel with the femal maid of honer I'm not sure it cost me anything
Its just a shame interest rates are so low, ATM, I spend so little it seems but, its not like the money in the bank is doing much, cept depreciating due to inflation I've bought a few expensive, things over my life, sort of excessive, or certainly not needed, but saved by not constant replaceing etc, and having bought relatively decent things, often they last for ages anyhow, though with a lot of things, like computers/laptops now, it seems pointless to spend much, as they're more or less throw-away after a couple of years
Actually this thread has reminded me, I must track down the book for my regular savings account, and take it into branch, to get it 'made up', about time I found out how much its gone up to in the last few decades

The last thirty years have not been kind to young people in three major areas: the cost of education, the cost of housing, and what I call product expectations.

Education: When I went to college at a state university, my parents were able to afford to pay the tuition and room and board without going into debt. Nowadays, some students ring up debt of 40 or 50 thousand dollars, which they will need to start paying back when they get their low-paying entry-level jobs.

Housing: house prices have gone up like crazy, pushing rents up as well, so those post-college entry-level jobs can't quite pay for college-debt payback and housing, so is it any wonder so many twenty- and thirty-somethings have to go back to living with their parents?

Product expectations: My parents learned frugality because of the Great Depression. They were there to chide my generation about conspicuous consumption and wasteful spending. Time is erasing their influence from our society, leaving more and more young people under the spell of keep-up-with-the-Joneses pressure. (Yeah, there was always a bit of that pressure even in my parents'generation, but there was also the memory of soup lines and auctions of repossessed houses. Plus, there are mating rituals that are apt to make participants feel insecure if they don't own something that might impress the immortal beloved.

And look what that same thirty years have done to the future financial security of the young: companies that once had good pension plans, managed by knowledgeable money managers, now make the young and financially untrained workers invest for their retirements themselves.

So, it's a witches' brew of unfavorable trends. Some people will find a way of making time their friend -- a thirty-year investing horizon lets you dollar-cost-average your stock purchases so that you're buying more shares when the costs per share are the lowest. The down side is that those low share prices might come when your company has laid you off, and you don't have the money to buy stocks then.

And, yes, common stocks are riskier than interest-bearing instruments. Risk and reward are joined at the hip, though, with a caveat: you don't get the extra return if you aren't diversified. And it doesn't hurt to become educated about what you are doing. Invest in what you know.

Have I mentioned the book _The Index Card_ yet?

I have?

Well, it deserves another mention.

"The index card" is probably a wonderful book, given that Burton Malkiel has a good opinion of it. I've enjoyed the various editions of his "A Random walk down Wall Street." Malkiel is a huge proponent of index funds; I have a significant amount invested in a cross-section of them myself.

Sadly, too many workers get penalized for not owning large amounts of stock in the companies they work for. It's not prudent for your company's stock to account for more than 30% of your portfolio. If your company tanks, you lose not just your income, but also much of your nest egg.

Hmm, whilst I appreciate that, that all has relevance for some, talk of investments and portfolios, mean absolutely nothing at all to me. I never have, and likely never will have the spare capital to drop a few hundred or thousand into a fund somewhere. The 'other-half' like me, just don't think in those terms. It's not a part of my life or my experiences.

Any money spent, either has to have an immediate return or gain (such as buying something cheap and selling it on for more), or have an immediate function or use; such as food, furniture, holiday, hobby stuff, etc.

Whilst I do appreciate that it's not necessary to put huge amounts into these funds, one does require knowledge and/or be prepared to lose money investing poorly, before getting the hang of things and starting to make money. If it was as easy as putting away £100 and coming back in a couple of years with a £1000, everyone would do it and there would be no poor people.

This is where people with no savings differ from those who do; those who don't, never have the spare capital to risk, or the time to wait for a return, to try things like investing. If i can't invest and get a bigger return within once month, then I ain’t ever going to invest. Simple as.

Yes, one has to spend money to make money, but to spend money one has to have spare money to spend/risk losing in the first place. Catch 22 and all that

Okay.

There are dozens of different perspectives on money. One of the more interesting ones was described by a character played by Brad Pitt in "The Big Short." He said "Seeds are gonna be the new currency."

I love to see the seeds come spilling out when I riffle an aging coneflower head. I watch with joy as some of those seeds germinate and start growing, even if they're in a crack in my sidewalk.

Give me a daisy field and I am happy.

"Yes, one has to spend money to make money, but to spend money one has to have spare money to spend/risk losing in the first place. Catch 22 and all that"

Yes, Catch 22 it is... There was an interesting meme that summed it up well, too, that if you need a pair of shoes right now and have no savings then you buy the cheapest (say £25) but if you have savings you can buy ones for £50 that last three times as long as the cheapest. Over that time the person with savings saves an extra £25...

Again, I'll recommend _The Index Card_. It gives advice on how to save even when you think you can't and it also explains how investing doesn't have to be difficult (financial professionals make their living by obfuscating and confusing the public on this matter). They recommend investing primarily in what are called "index funds". Rarely do managed mutual funds and other financial professional's advised investments out-perform the index funds, and more importantly, index funds have lower fees since they are passively managed.

Even if you really can't afford to save money right now, this book will give you very sound and simple advice on how (and which) debts should be payed down first and other strategies to get on better financial footing.

And best of all, it is all explained simply. Typically any discussion of economics and finance would make my brain just shut off, but I found this book enlightening and a pleasure to read.