By Madeleine Horton
A few days ago, estate agent Strutt & Parker argued that millennials would be in a much better position to get their foot on that first tricky step of the property ladder if they would only cut back on their lunch-time splurges – by that they mean buying those overpriced sandwiches and meal deals, which always seem to be a much more attractive option than preparing your own Tupperware luncheon. It is a bold claim.
After doing the maths, they concluded that resisting this daily expense could save the average young person a whopping £2,576 a year, which would then be subsidised by saving in other small ways. The average deposit for a house in Britain – all legal expenses included – currently stands at around £22,000. Yet apparently, with enough scrimping and saving, enough sacrificing of our little luxuries, it is possible to save enough for a deposit in as little as five years – if you play your debit cards right.
Naturally, the claim was met with backlash online from those targeted: surely the answer to our housing woes is not as simple as cutting back on sarnies.
Living within your means is part of being an adult
I am an advocate of frugality, despite the occasional Topshop splurge and the unavoidable expense when choosing a university education. Being savvy and ‘looking after the pennies’ is good practice, and not akin to ‘cutting corners’. Living within your means, and not descending regularly into the darkest depths of your overdraft, is surely part of being an adult and being able to manage the money you have responsibly.
However, while it’s necessary to make little cut-backs (such as snooping around the ‘reduced’ section for those prized yellow stickers), cutting back during the prime of your life to such a radical extent that you become a frugal hermit is not fun or advisable at all.
In addition to cutting back on sandwiches, which is sensible, common sense knows that a homemade butty can be prepared for a fraction of the cost – the estate agent in question also advised cutting back on other ‘luxuries’ such as mobile phone upgrades, going out with friends and annual short city breaks. If you’re outgoing, social, and want to live your life to the fullest, cutting back on maintaining a social life and taking inexpensive trips is a rather hefty sacrifice to make. Life can’t be ‘all work and no play’.
Though planning for the future, as much as is possible, is always a good move, sacrificing so much that there’s no enjoyment to be had is not productive or healthy at all. There has to be some leeway in your spending, though it’s a difficult balance to achieve: enjoying yourself occasionally whilst also saving incrementally.
The issue is much larger than little luxuries. British culture is moving increasingly forward towards an Italian-style status-quo where it is increasingly acceptable to continue living at home with parents longterm until financially stable enough to fly the nest. This might be considered a small comfort.
Living with parents seems preferable to falling into the ‘rent trap’
Though many strive for independence, we have almost come to accept that the current housing market is sharply against our favour. Living with parents and hopefully scrimping enough for that big deposit seems preferable to falling into the ‘rent trap’, where we find ourselves paying high rents on sub-par housing. This only feeds the wallets of the property developer types to be seen on Homes Under the Hammer, and older folks who have chosen to invest their money in a housing portfolio – buying up properties en-masse and further narrowing the market for first-time buyers.
Naturally, there are government schemes such as ‘Help to Buy’ which aim to ease the pressure for those starting out, offering decent rates on ISAs – but these are sadly not taken advantage of enough by many youngsters. It’s a difficult environment for starting out, there’s no two ways about it.
Though there is some small truth in this estate agent firm’s advice that little cut-backs go a long way in preserving your bank balance, their words should definitely be taken with a pinch of (Tesco Everyday Value) salt. It’s not the magic answer – saving for a house deposit is going to take a considerable amount of time, and is not going to be easy in the slightest.
Photograph: Transport Pixels via Flickr and Creative Commons