Sunday, 5 October 2014

in the black: spending habits in the young

Steve Levitt of Freakonomics argues that young adults are the poorest they're ever going to be, so there's no point in their trying to save money. They should spend. They will have more money to pay it back later.  

What was your relationship with money like as a young adult?

It certainly seemed to me when I was younger that people were trying to get me to spend money I didn't have, and while I can see that Steve Levitt might have been right, objectively...

...I can't stand being in debt.

I had a period of time when I was young when I had £75 incoming per week in benefits, and £70 outgoing on rent. It didn't last long; it wasn't comfortable in the slightest; but I didn't spend money I didn't have (at the time, I wasn't given the option to!), instead, I cut my cloth, buying veg for pennies, which the greengrocer was going to throw out, and cooking up big pots of stew, which I would eat for three meals a day. That kept my food budget down around £2 a week, so I had £3 to spend on fags, cider, and dresses. That didn't work out terribly well, and I entered into any arrangements I could to get more money, subletting my flat whenever possible; cadging drinks and fags as I could.

The landlord offered me a better deal in the end, which I took, and in time I got a badly paid job, and worked to pay the rent and afford more cider, fags and dresses. I still mainly ate stew, although I now had porridge for breakfast – luxury.

I carried on working in badly paid jobs and paid the bills, and put money aside because I wanted to go to university, and that involved a whole lot of not working. 

Happily when I went I still could get a grant for my accommodation, but I had to work to pay for my food, fags, cider and dresses. I worked in the holidays, paid my mum rent, and struggled to put the rest aside. 

I was painfully aware that other people got student loans and credit cards, and didn't pay rent to their Mums. I was very grumpy about it.

I did end up getting a student loan in the third year of my degree. I didn't want to, but I just couldn't make ends meet any more. The stress it caused me was horrible, just knowing it was there, and when my Grandad died, soon after I left University, leaving me a little money, I just paid it off. The thing is, I still haven't earned enough to have to.

Now I do not think it is right for companies to make money off people who cannot afford to pay it, but I also don't think it's right for people to borrow money they can't pay back. I know people who've had their credit card debt written off because they were deemed too irresponsible to pay it back, even though they could have, if they'd just stopped buying stuff they didn't need. I probably judge them harshly, because I just couldn't handle the STRESS of it.

Wonga has recently written off a load of debts, and they no doubt had to, because they were lending it to people who couldn't afford to pay it back.

However, there's a part of me stomping my feet and saying it's just so unfair that people who are profligate get away with it.

I know profligate is an emotive term. I know that there are lots of people who are constantly living in desperate times, and do not have the good fortune I had to climb out of it, who take a loan that they are given to make today better, in the hopes that tomorrow will take care of itself. I also know that accruing debt is bound up with mental health issues, and there is such a lack of support for that, so I don't want to be Judgey MacJudgerson about it (well, mainly not).

I don't think I'm suited for the stock exchange, and I'll never have a debt written off by Wonga, but at least I know I can live on stew (although these days I think I'd rather go rooting in the bins behind M&S).

What about you? What were you like with money when you were young?

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