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to have assumed that a 100k salary in London would mean we would be more comfortable than we are?

(248 Posts)
Baydreams Thu 18-Apr-19 12:08:16

I've been prompted to post this after reading the post about high earners and the two schools of thought that 100k either "isn't that much when you live in London" or "It's a lot compared to the average national salary". That post is here: www.mumsnet.com/Talk/am_i_being_unreasonable/3561649-To-ask-those-who-have-high-earning-partners?

So, the backstory is that we started a family unexpectedly in our early twenties and abruptly adjusted to a household income of £26k, living in London. We stuck to a grocery bill of £40 per week for a family of three, and never spent a penny on small luxuries like coffees, clothes, haircuts, etc. Even so, our household income wasn't enough to cover our mortgage (£800 per month and cheaper than renting), and all the usual bills and outgoings. We slowly sunk into debt just to cover a pretty frugal standard of living. After 5 years, this debt was at £25, so essentially we needed to earn at least 30k to even out our costs.

During the last year of this, my partner landed a higher paying job, and our area of London had had a bit of a boom, meaning we could afford to move our family out of our flat to a 3 bed terrace house in the same area, taking some of the equity to zero our debt.

Over the next years, our household income grew to around £100k, give or take. (My partner has a commission based job so we never quite know what the exact figure is going to be, but it's usually just over or just under 100k).

We live in one of the last remaining affordable areas of London. Our house is valued at £450k. Mortgage repayment is approx £1300 per month. No other huge costs apart from running one family car. We have three children. On a household wage of approx £100k, we can now comfortably pay our mortgage, and live a much happier day to day lifestyle in that I don't feel guilty any more about booking in a haircut or buying a coffee.

We are so relieved to be out of the hole we were in financially, and I don't see £100k in our area of London as a struggle at all - there are many people earning less where we live.

But, I will confess to assuming that it would mean we could afford more than we actually can in reality. For instance, we have found that we aren't able to accrue any meaningful savings - maybe £150 a month which tends to get eaten up very quickly as an 'emergency costs' fund. And holidays abroad are beyond us. We tend to be able to save for one once every three years and the other years we do UK camping holidays.

Previously to earning £100k a year, I did assume that holidays and savings wouldn't be a problem. How do other people with similar earnings and outgoings make it work in terms of saving for luxuries like holidays etc? Do you find you can comfortably afford to save AND go on holiday? Do you substitute one for the other? Do you find it easy enough to live on 100k or do you find it a balancing act to cover everything you would like from your lifestyle?

titchy Thu 18-Apr-19 12:54:30

If total outgoings are £3k a month and you bring in £5k a month where on Earth is the other £2k going?

You can almost certainly afford a family holiday abroad every year. Separate bank account for all regular bills (utilities, phone, childcare, pay everything by direct debit). Work out annual costs of other expenses such as a car tax, birthdays, Christmas. Be generous. Divide by 12 and pay that amount into bill account as well. Pay an extra £200 a month into this account for emergencies.

DO NOT TOUCH THIS BANK ACCOUNT EVER! EXCEPT IN ABSOLUTE DIRE EMERGENCY.

Then write down every single thing you spend money on for a month. Every take away coffee, newspaper etc and see where it's going.

Tinkobell Thu 18-Apr-19 12:55:09

£100k isn't a fortune in London with 3 kids but you've got a house fgs! You can either get annoyed & frustrated that London costs too much and stay put and continue to feel short-changed each day or you can actually consider getting a better paid job or moving somewhere cheaper to readjust the equation.

Brownzy Thu 18-Apr-19 12:55:37

Our household income is probably the same or just slightly lower.

So of the 5k we get post tax - 1000 goes on childcare, 1000 goes on mortgage, 400 goes on petrol, 300 on dog walking, 200 on council tax, and a further 200 on household bills.

That doesnt include paying insurance for car etc. We put away 350 quid a month savings and I'm paying off some credit card debt.

We are up north...I can imagine 100k doesn't go very far in london

Whatthefoxgoingon Thu 18-Apr-19 12:56:42

In your situation I’d be aiming to live on your DH’s salary only, banking yours entirely for savings and holidays.

Home77 Thu 18-Apr-19 12:57:00

Is it a bit like Bath? It seems expensive here, and housing costs similar. It's easy to spend a lot, and even things like public transport costs are much higher. It all adds up before you notice

AntiHop Thu 18-Apr-19 12:58:19

It's a complete fallacy that everyone who owns a house in London has a household income of 100k or more. That will never, ever happen for me and dp.

I live in London. My dp's income varies, but last financial year he earned about £18k and I earned £43k. We count ourselves very lucky that we were able to buy a house. We know that many, many people in London can't buy a property and live in overcrowded accommodation.

The way we afford to live in London is: we only have one child. Money is the only reason we haven't tried for another, but we haven't ruled it out totally yet. We don't have a car. We bought a house that is too small for us. (2 beds but really need 3 as dp is self employed and works from home. And the rooms are very small). Only one of us is paying into a pension. We don't have any hobbies that cost money. Our main luxury is some meals out.

BarbaraofSevillle Thu 18-Apr-19 12:58:42

total outgoings are £2900

Including food, travel etc? So you have well over £2k pm that's effectively disappearing or going on what? Clothes, beauty treatments, activities, meals and drinks out?

What does your DH do for lunch etc during the day? If he's having 'the London office lifestyle was eating out at Pret everyday for lunch, buying several coffees, going out', he could be spending a few hundred pounds a month easily? Is he a spender or a saver?

What about you? Do you have coffees and lunches out? Take the DC to paid activities?

How is all this paid for? Many bank accounts and credit cards allow you to download transactions with categories, so you can see where it goes. Until you have worked this out, and agreed a plan, you don't really know where your money is going. it sounds like you are very comfortable, you certainly have a lot of spare money, but what you are spending it on isn't necessarily as worthwhile as it could be.

What's the deal with the car - when the £300 pm ends, will you own it? Will you need to take out another finance deal? How many miles a year do you do and what are your other travel costs - tube pass etc? Does one of you use it for work? Can you make do with a cheaper car?

Can you take, say £1000 pm and put it in savings and try and live on the rest? Then you'll have money saved for a holiday every year.

PettyContractor Thu 18-Apr-19 12:59:49

Total spending £3K a month sound plausible. One salary of about 50K before tax would cover that. So clearly you have either a lot less income or a lot more expenses than you've listed.

Sexnotgender Thu 18-Apr-19 13:00:01

Net outgoings £3k approx and net income £5k give or take... yet you can only save £150 per month and then use it for emergencies?

You’ve got a monthly £2k black hole!

Ghanagirl Thu 18-Apr-19 13:00:49

YANBU
Joint income of £130,000
DH full time me 2 days a week
Two DD’s two cars one (occasionally two) overseas holidays a year nice 4 bed house in London but we don’t have lots of spare cash as a lot also goes on kids activities.
We are comfortable but despite coming from a much poorer background I don’t feel rich.
I think it’s partly because most of our friends in similar position.

Baydreams Thu 18-Apr-19 13:01:54

To everyone who has asked for clarification on what we spend the rest of the money on - looking at our budget spreadsheet the gap between take home and our expenditures is less than I originally thought, as for the past year our combined earnings have been 12k under 100k.

I still feel like we should be able to save more, though. I used to be really on the ball with our budget, but less so since my partner became the main earner (but that's a whole nother thread topic, really!) Thanks @spacecadet4000 for mentioning those tracking apps, I didn't realise those existed and would definitely make it easier to keep track of all credit card etc in one place.

Another issue we have with budgeting is that my partner travels a lot for work, and needs to pay for travel, hotels, etc on his accounts before expensing it back to the company. We don't get the money back for a few months and this can often leave a huge short term deficit in our finances, which I find really hard to keep track of when it comes to our monthly budgeting. We are often in minus figures whilst waiting for these expenses to be paid.

My partner isn't that organised when it comes to finances (not that he's spending it, but definitely he might forget what he's owed from expenses, or forget to expense certain costs), and this thread has definitely made me think it would be better for me to take control of our budget and finances and make sure everything is as it should be. I don't really know where to start with that when his role is commission based so it's a different amount coming in every month, and then all these work-based expenses on top. But I'm there's probably a spreadsheet or app that would work it all out for me. This thread has made me realise I need to do that.

Whatthefoxgoingon Thu 18-Apr-19 13:02:02

And I’m a bit dubious about this so-called London lifestyle everyone keeps banging on about. You don’t need to participate in any of it. Our household income is much higher than 100k but I don’t feel any need to fanny around with a disposable coffee cup or a pret bag to be a part of London. confused frittering money on convenience rubbish is a massive money drain with nothing to show for it. I’m a big proponent of making your money make more money instead.

MsRabbitRocks Thu 18-Apr-19 13:05:37

Excellent post Babuchak

littlebunnyhophophop Thu 18-Apr-19 13:07:22

This is odd I honestly don't get the whole London 'lifestyle' we live just outside Glasgow we have a council house although before when we private rented it was only 100-150 more expensive , we own 2 cars go on a foreign holiday once a year and own a caravan obv have to pay site fees each year , kids have designer clothes etc and we are not in debt , our combined income including carers allowance , tc etc is 30k a year as I don't work ds is disabled and only husband works we have 2 kids and we live comfortably why is it so expensive down south 🤷🏻‍♀️🤷🏻‍♀️

BarbaraofSevillle Thu 18-Apr-19 13:09:07

If he's spending a lot for work and they're slow to pay it back, for he forgets/can't be bothered to claim, he needs to sort it out. Being 'disorganised' isn't really an excuse. There will be many many people who simply can't afford to be constantly owed expenses from work like that.

If he's earning £86k pa, he's certainly very capable, so he needs to make this just as important as everything else he is responsible for.

Can he put all the work expenses on a separate credit card and then if they don't pay up, when the bill is due, also claim the interest? Can his work book as much of his travel for him, thus reducing the amount he is owed? Or is he happy to potentially just give his work thousands of pounds back each year?

Of course you could take a closer interest in this and effectively do his expenses for him, or keep a list every time he is away and go through 'have you claimed for that parking, flight, car hire, meal' but you really shouldn't have to.

Oblomov19 Thu 18-Apr-19 13:10:59

Using a simple spreadsheet and going through a month of bank statements was an unfortunate eye opener for us!!

PeoniesandPretties Thu 18-Apr-19 13:14:44

I think it's a case of your living to your means, you need to live as if your earning less. Of course its lovely when you have a good income to spend and not worry but time and time again I see this, those you would class as wealthy, in debt!
We've gone from being very comfortable to now one wage as I've become a stay at home mum. We're actually better off and have savings as I'm so aware of spending, before any purchase I think do we actually need this.
It's a long journey but apart from a mortgage there's absolutely no reason to be struggling with such a high wage coming in.

Inliverpool1 Thu 18-Apr-19 13:15:09

You need a copy of a book called the bare foot investor, he’ll sort you

Baydreams Thu 18-Apr-19 13:15:18

@barbaraofseville

Not including groceries and food. Sorry, I know I'm being confusing with this. I quickly added up the expenses before realising food wasn't on there. So that's at least £400 per month more.

Not much on clothes and beauty but definitely a bit on pub drinks and a couple of meals out per month.

DH is half and half leftovers for lunch / buying lunch at work.

What about you? Do you have coffees and lunches out? Take the DC to paid activities? ....Nah, rarely.

We will own the car when the payment ends. DH has london travel card costs.

"Can you take, say £1000 pm and put it in savings and try and live on the rest? Then you'll have money saved for a holiday every year." This sounds like a good idea, we'll try this. Thanks.

Genuinely thanks to everyone who has given practical advice. I don't have parents around to give me this sort of money advice. And we never got used to a household income before becoming a family. We were two people living separately then suddenly a family of three learning all the expenses of a combined household. Feel like I still have a lot to learn about budgeting. And chatting candidly about savings and earnings doesn't seem to happen in real life. Partly the reason I asked in the first place, because I knew there would be others with similar finances that would have advice.

Dishwashersaurous Thu 18-Apr-19 13:16:41

Do the children do lots of activities ?

Music lessons, sports club, swimming lessons, drama x three can easily add up to £5/600 a month

Oblomov19 Thu 18-Apr-19 13:16:44

shockDh is absolutely meticulous about claiming back his expenses.

I agree with pp - get him a new credit card, for work only, nothing else.

ShatnersWigIsActuallyAMammoth Thu 18-Apr-19 13:18:45

There's still money missing.

Your DH has a cocaine habit.

lisasimpsonssaxophone Thu 18-Apr-19 13:19:20

I used to earn double what I earn now and I don’t remember ‘feeling’ any richer than I do now. The thing is, if you aren’t strictly budgeting or watching what you’re spending, then the money just goes. Most people just lives within their means and you rarely hear someone say ‘actually yeah, I’ve got enough money now’.

When you earn very little there’s nothing more irritating than hearing a high-earner say ‘if I’m so rich then how come I have nothing left at the end of the month?!’ err, because you spend it? That’s how money works!

And there are a lot of things that people take for granted too. I look back to when I was earning more, and realise that I would regularly fritter away £20 on my way home just popping to the shops and buying random crap. I used to get my nails done every two weeks and a bikini wax every month at a very nice salon that was incredibly overpriced. A couple I know are very well off and the husband was recently mentioned to me that he buys a £10 salad (plus a drink and other bits I’m guessing) for his lunch every day... he sees it as totally normal but that’s not something most people I know could ever dream of doing. That would be my disposable cash for the whole month! Not saying he’s wrong to do that, just that it’s easy for money to disappear on those kind of things and you take it for granted that it’s the same for everyone else too.

adaline Thu 18-Apr-19 13:19:54

Well, that explains a lot of it.

£400 on food (probably closer to £500 once you count in mid-week shops for milk, bread and other perishables), two meals out a month for a family of five is easily £100 a go, then a husband who buys maybe 10 lunches for himself too. Even if he gets a cheap meal deal everyday (unlikely) that's £15 a week, so £60 a month just for him. That's probably close to £1000 on food for the lot of you each month.

updownleftrightstart Thu 18-Apr-19 13:20:44

Our combined income is a bit less than yours (about 92k combined but we still get child benefit). Mortgage is £1500, run one car and spend around £400 monthly on commuting and £700 on childcare.

Of course our income doesn't make us rich but i feel fairly comfortable. We manage to save, and have 2 foreign holidays booked for this year, with plans for another 2 short breaks later in the year.

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