As a late gen-X'er (I feel I have far more in common with millenials than my 12 years older brother, also gen-X), I think it actually is really interesting to see how some millenials and moreso gen Z see their financial problems as intractable.
The actual reality is that every generation has complained about crippling prices when they're in their 20s, especially property, only to find that as they get older their salaries eventually rise and then they start earning over the median salary, they find they're actually in a good place.
Personally, I couldn't afford to get on the property ladder until I was 28, and I've always been a big saver. Just before I actually bought my house, there was a massive property price boom in the UK - 18 months earlier I'd looked at a house on the same road as the house I eventually bought, with a loft conversion (extra room) and in better condition. The house I bought 18 months after viewing this one (and deciding I couldn't really afford it) was 50% more, and my salary was exactly the same 18 months later. In fact, I could only afford it because the bank was running an offer on its graduate accounts that allowed a 4x mortgage instead of the standard 3x. In that brief moment of eligibility for that mortgage, I went for it, despite knowing that it'd be even more financially burdensome than the much cheaper house I'd decided against on financial grounds.
As it turned out, I ended up buying at the peak of the market, and the value of the house remained stagnant for 10 years. Along the way, I had other setbacks, like getting a 5 year fixed rate mortgage for 5.5% three months before the Bank of England dropped rates down to 0.25%, but the exit penalties were so high I had no choice but to suck it up.
But the thing is, even though the value of the house didn't change for 10 years, my salary did. What seemed impossible right up to the point of stretching myself to the limit and committing to the mortgage, a few years later was tolerable (although I didn't change my spending habits, instead I overpaid my mortgage as much as I could because of the high interest rate and terrible savings rates), and after 10 years, everything was very comfortable because I'd had 10 years of inflation in my income, but my minimum mortgage payments were still roughly the same. Finally, after overpaying like crazy, I paid off my mortgage after 18 years into the 25 year term. Now it's all paid off, my life is definitely on easy mode, but I do feel somewhat aggrieved when a gen-Z'er says "oh, you're just the generation that had money", because I sure as hell didn't have any money at the start of my working life - it took ploughing everything I had into savings, and then into the mortgage for the house to make that happen.
So, what can a gen-Z'er take away from this? They could just say "yeah, it's too hard" and just give up. Sadly, I think a lot of them do think that way. Or they could think, "life is hard, I need to save hard". Sooner or later, the opportunity will come - house prices are cyclical, sometimes they go up in value at insane rates, other times they stay about the same for years. But to take the advantage of the opportunity when your salary is relatively high and the house prices are relatively low, you need to have made some savings in the meantime. If you give up too soon, you're guaranteed to hit the failure state. If you persevere saving, even a little, sooner or later, there will be an opportunity for you to seize.
I know for some people, it's going to be impossible - if you are genuinely living pay cheque to pay cheque, it's tough. The smallest thing can completely ruin you. That's why it's even more important to save what little you can, whenever you can. That £5 coffee, even as a once-a-week weekly treat, is £250 a year of missed savings opportunity. That £10 netflix subscription, £500 per year. That £50 on alcohol going out on a Friday night, £2500. I know these latter comments will sound ridiculous to people who are genuinely spending everything they earn just to get by, and I'm sorry if this sounds flippant, but equally there are gen-Z'ers complaining they will never afford a house who can afford to pay abroad for a "holiday experience" because they're "living in the now" or some nonsense. Those people could easily save up the deposit they need for a house if it was genuinely a priority for them. Maybe it'd take 5 years until the market conditions work in their favour, but the point is not to give up because you think life is unfair. It's been just as unfair to almost everyone in the past too. You need to just get on with it and press on through.
As an example of what it is to live a frugal lifestyle, I currently spend about £700 per month on council tax, utility bills, food and entertainment. In the last 2 years, I've spent about £4000 on travel and holidays. If I hadn't already paid off my mortgage, I could rent somewhere for about £700 per month. That comes in at about £1600 per month, so my equivalent income to sustain this lifestyle is £21000 per year. That's far below the median UK salary, but it's easily achievable because I choose not to go out drinking very often (around once a month, £15-£20 for the evening), I don't have lots of TV subscriptions, I just have a single subscription to a video-on-demand service that's £35 per year. I have the money to spend much more if I wanted, but my priority is still saving - only now it's for retirement.
That is surprisingly low. Here in the US it is over $1300/£1000. Rent has increased 20% since 2020 due to collusion among landlords, among other things.
Rent/housing is such a big part of monthly expenses that it doesn’t even matter whether you have subscriptions or not. Savings from cancelling your Netflix will quickly be eaten up by any small increase in rent. These are changes caused by large-scale political decisions, not personal moral failings of vast numbers of consumers.
Replying separately from my other reply, because I think this is a totally different issue and actually gets to the core of the issue in the article.
> Rent has increased ... due to collusion among landlords, among other things.
> ... is such a big part of monthly expenses that it doesn’t even matter whether you have subscriptions or not. ... These are changes caused by large-scale political decisions, not personal moral failings of vast numbers of consumers.
To me, both these statements are indicative of passivity and lack of agency about the situation that exemplifies the Gen Z mindset towards money. The first attempts to blame someone or something else for the high rents, which doesn't achieve anything apart from increasing the feeling that life is unfair. This mindset doesn't allow a way to break out, because it relinquishes agency over the situation to someone else.
The second has so much to unpack - it's pointless even trying to spend less; it's the government's fault; lots of others are in the same boat; trying to help someone to save is pointing out their personal moral failings. But none of these things are actually true.
It's not a personal moral failing to be short of money. Arguably, there'd be a case to be made if someone was gambling thousands of dollars away every month while their kids starved. If you're just working a job, struggling to make ends meet and having to live pay cheque to pay cheque, that's not a moral failing, that's making the best of a bad situation. People in that situation usually have already cut out all unnecessary spending, because they've often had to make the choice between things they actually need and had to do without something they actually need. There are still ways out in that situation, and sadly the easiest to say and the hardest to actually do is just to leave the situation, move somewhere cheaper to live and try to start again.
That isn't what the article is about though, it's about how Gen Z is nihilistic towards money. How does someone who does have a decent income, but chooses to spend it on a fun lifestyle, on experiences, etc. respond to the statement "if you make your life a little less pleasant now by giving up X, then you can save that money and make your future life better"? I can totally understand why people don't want to give up X - they obviously want to keep life with its current level of pleasantness, so then it comes down to priorities - what is really more important to an individual? For example, a cup of coffee every day for a year, or no cup of coffee each day and having a a month's rent in savings at the end of the year so e.g. a random car breakdown doesn't stop you paying rent? Maybe after a month of skipping the coffee and seeing that it wasn't that hard after all and seeing the difference in the bank, they might then consider not having lunch out every day, instead taking in sandwiches 4 days a week. Maybe they might consider whether they really need Amazon Prime instead of just waiting 3 days and using the free shipping. But I think most of them won't, and that's the point of the article. Most Gen-Z'ers don't prioritise the savings and the future reward, because they want the short term experiences and happiness. More than that, their peers all agree that it's not their fault, they're powerless to do anything about the situation, they could never hope to ever save up the deposit for a house, and so they might as well not even try. It's this mindset that's depriving them of their own agency, not the government, not previous generations, not anyone else.
We can say it’s a mindset issue or that Gen Z needs to take more personal responsibility for their financial situation, but that essentially ignores all of the facts on the ground that are the results of trends and political decisions that happened before they were born. It isn’t their fault that things have become so expensive. It’s the fault of the profit maximizing companies that control the economy, and a political class that has allowed these problems to fester.
It used to be possible in America to buy a house and raise a family with free education. This is no longer possible. It was a choice to only zone for single family housing. It was a choice to cut state funding for universities which has led to unsustainable tuition bloat. It was a choice to allow companies to ship jobs overseas for pennies on the dollar. All of these choices reallocated money from younger, poorer people to wealthier, older people.
> It isn’t their fault ... It’s the fault of ...
> It used to be possible ... This is no longer possible.
These statements are the very essence of the nihilism in the article.
It doesn't matter if a situation is less advantageous to you than it was to someone 10, 20, or 50 years ago, or why the situation has changed. What matters is how you can best deal with the situation you find yourself in now.
Giving up, saying it's too hard so there's no point trying, blaming someone else all have the same outcome - nothing will change.
To use a card analogy: maybe you haven't been dealt the best cards in life, but if you fold every hand, you're never going to win. But if everyone else has terrible cards too, you can easily win with a bad hand if you play to your strengths.
I won’t disagree there are more and less productive mindsets you can have about your situation. But mindset isn’t everything. You can choose to have a productive mindset while understanding the political choices that were made. And that is important because we can make political choices to fix the problems that have been caused. You can’t just grind your way out of neoliberalism.
Your card analogy hides the fact that your cards weren’t dealt randomly. Opportunity isn’t evenly distributed. The cards were deliberately chosen. Politicians chose winners and losers when they rewrote the tax code to reward capital over labor, make it easier to ship your job overseas, cut funding for education, and now allow companies to buy up a quarter of new housing. And the only way those trends get reversed is if people become more aware of it, not less.
Yeah, the UK is generally much cheaper than the US (at least the bigger cities). I also live in a fairly cheap city, where rents are about 3/4 of the rents of the next city along and probably half that of most of London.
I actually just checked spareroom.co.uk and you can get a double in a shared house for a bit under £500 in my area. I only found one flat for rent (smaller than my house, but closer to the city) and that was £750. Prices in London are a lot higher. A few years ago, a double room outside central London was at least £700, and at least £1200 for inside Zone 1.
> Savings from cancelling your Netflix will quickly be eaten up by any small increase in rent. These are changes caused by large-scale political decisions, not personal moral failings of vast numbers of consumers.
To be clear, I'm not saying having a Netflix subscription is a personal moral failing. I'm just saying, not having it is an easy way to save £120 a year. Most people actually have a lot of discretionary spending, all of which seem small on their own, but when considered as a whole become a large chunk of expenditure.
The actual reality is that every generation has complained about crippling prices when they're in their 20s, especially property, only to find that as they get older their salaries eventually rise and then they start earning over the median salary, they find they're actually in a good place.
Personally, I couldn't afford to get on the property ladder until I was 28, and I've always been a big saver. Just before I actually bought my house, there was a massive property price boom in the UK - 18 months earlier I'd looked at a house on the same road as the house I eventually bought, with a loft conversion (extra room) and in better condition. The house I bought 18 months after viewing this one (and deciding I couldn't really afford it) was 50% more, and my salary was exactly the same 18 months later. In fact, I could only afford it because the bank was running an offer on its graduate accounts that allowed a 4x mortgage instead of the standard 3x. In that brief moment of eligibility for that mortgage, I went for it, despite knowing that it'd be even more financially burdensome than the much cheaper house I'd decided against on financial grounds.
As it turned out, I ended up buying at the peak of the market, and the value of the house remained stagnant for 10 years. Along the way, I had other setbacks, like getting a 5 year fixed rate mortgage for 5.5% three months before the Bank of England dropped rates down to 0.25%, but the exit penalties were so high I had no choice but to suck it up.
But the thing is, even though the value of the house didn't change for 10 years, my salary did. What seemed impossible right up to the point of stretching myself to the limit and committing to the mortgage, a few years later was tolerable (although I didn't change my spending habits, instead I overpaid my mortgage as much as I could because of the high interest rate and terrible savings rates), and after 10 years, everything was very comfortable because I'd had 10 years of inflation in my income, but my minimum mortgage payments were still roughly the same. Finally, after overpaying like crazy, I paid off my mortgage after 18 years into the 25 year term. Now it's all paid off, my life is definitely on easy mode, but I do feel somewhat aggrieved when a gen-Z'er says "oh, you're just the generation that had money", because I sure as hell didn't have any money at the start of my working life - it took ploughing everything I had into savings, and then into the mortgage for the house to make that happen.
So, what can a gen-Z'er take away from this? They could just say "yeah, it's too hard" and just give up. Sadly, I think a lot of them do think that way. Or they could think, "life is hard, I need to save hard". Sooner or later, the opportunity will come - house prices are cyclical, sometimes they go up in value at insane rates, other times they stay about the same for years. But to take the advantage of the opportunity when your salary is relatively high and the house prices are relatively low, you need to have made some savings in the meantime. If you give up too soon, you're guaranteed to hit the failure state. If you persevere saving, even a little, sooner or later, there will be an opportunity for you to seize.
I know for some people, it's going to be impossible - if you are genuinely living pay cheque to pay cheque, it's tough. The smallest thing can completely ruin you. That's why it's even more important to save what little you can, whenever you can. That £5 coffee, even as a once-a-week weekly treat, is £250 a year of missed savings opportunity. That £10 netflix subscription, £500 per year. That £50 on alcohol going out on a Friday night, £2500. I know these latter comments will sound ridiculous to people who are genuinely spending everything they earn just to get by, and I'm sorry if this sounds flippant, but equally there are gen-Z'ers complaining they will never afford a house who can afford to pay abroad for a "holiday experience" because they're "living in the now" or some nonsense. Those people could easily save up the deposit they need for a house if it was genuinely a priority for them. Maybe it'd take 5 years until the market conditions work in their favour, but the point is not to give up because you think life is unfair. It's been just as unfair to almost everyone in the past too. You need to just get on with it and press on through.
As an example of what it is to live a frugal lifestyle, I currently spend about £700 per month on council tax, utility bills, food and entertainment. In the last 2 years, I've spent about £4000 on travel and holidays. If I hadn't already paid off my mortgage, I could rent somewhere for about £700 per month. That comes in at about £1600 per month, so my equivalent income to sustain this lifestyle is £21000 per year. That's far below the median UK salary, but it's easily achievable because I choose not to go out drinking very often (around once a month, £15-£20 for the evening), I don't have lots of TV subscriptions, I just have a single subscription to a video-on-demand service that's £35 per year. I have the money to spend much more if I wanted, but my priority is still saving - only now it's for retirement.