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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:

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?

SlappingJoffrey Tue 23-Apr-19 16:09:14

The issue is housing & childcare. It is a good salary & when looking at averages high but it just doesn’t go very far any more. Take any road near me (SW London) & you will have people who bought 50 years ago & are now retired with a healthy pension & maybe some money from equity release. You then have families with an income of 50k who got on the ladder in the 90s so have hundreds of pounds of equity & now have a nice house with a tiny mortgage. You then get the professionals on 100k who bought in the last few years with hefty mortgages. Guess who has the least disposable income.

Very true. There are always a few who just won't have it whenever anyone points this out though. The reality is that London is a city where people are paying hugely varied housing costs, and so things like median household income are not very useful stats when you don't contextualise them.

That said, in the OPs case, it isn't housing and childcare. I was expecting to see that they were paying childcare for 3, extortionate private rent or mortgage etc... but no!

Xenia Tue 23-Apr-19 07:55:34

Also, i f you have £10k of "spare " income after you have paid your mortgage, childcare etc you could either use that for day to day living or put it in a pension. Ify o have loads of spare money then yes I agree that for some particularly those in families or long livers or who will retire early a pension contribution may be a good thing even with the very low annuity rates, but it does mean that you don't have that £6k after tax of the £10k to spend/use. I have in my 30s put some money into a pension which I cashed in at 55 - when I chased it in the state got 45% of 75% of the fund. For most people who have spare money particularly those lucky enough to get employer contributions to a pension and who will retire at 67 etc and live for years it does make sense (if you trust the staet not to change pension rules which sadly the state does all the time) to put that money aside there. For me not so much.

Lardlizard Mon 22-Apr-19 20:00:06

It would be if so much wasn’t taken in tax

silvercuckoo Mon 22-Apr-19 19:59:37

Take off £300 childcare
Always puzzled when figures like that are quoted. I could not find full time childcare cheaper than £1.2K per head, which is pretty much the same as my mortgage.

Alsohuman Mon 22-Apr-19 19:59:29

Thing is @Xenia, given that you get tax relief on pension contributions, it seems extraordinary to me that you’re paying much more tax than you actually need to because you’re convinced you’ll still be working when you open your card from the Queen. If you resent paying tax so much, why wouldn’t you reduce the amount you pay?

Xenia Mon 22-Apr-19 19:53:48

Yes, I know. I was just joking. I don't expect any priority NHS care.

I do have a state pesion at age 67 which after 40 or 45% tax leaves enough for my council tax. So I wll really be in the money then if I reach 67.

Alsohuman Mon 22-Apr-19 18:16:55

She’s hardly er “comfortably off” with no pension or savings. And, sorry there’s no premium, gold NHS service for those (I’m one too) who make few demands on it. My grandparents died in their 70s, their son lived to 99 so he was pretty glad of his pensions.

Xenia Mon 22-Apr-19 17:52:07

Also, if ou have a lot of children and expenses and £90k mortgage you don't always have spare money to put into a pension. If your expenses are your earnings then pension contributions are pie in the sky for most people including for me at various times.

The average life expectatncy of women in my family is about 66 although my mother did reach 75 so I suspect I will have 20 years less in retirement than a lot of MN posters. Secondly my father worked almost until he died. I don't see why I shoudl be different as all I need is to be able to type at home - which is basically my job.

If I have a life changing illness which means I cannot either type or speak eg dementia then I probably won't have it for long and if I do then I've the NHS - i should entitled to some kind of gold plated super NHS service after all my massive taxes since 1983 and I could sell my house and once the twins are off my hands I might well be able to save up some money. I have only seen my GP once in 12 years so I ought to get some kind of NHS pirority or medal for that lack kof use! More seriously lucky me. Every day I wake up feeling very lucky, not because I earn fairly well but because I just about never seem to get ill. (One cold in 2 years etc).

Inliverpool1 Mon 22-Apr-19 17:47:31


Unburnished Mon 22-Apr-19 17:36:25

I doubt Xenia has to worry about what she’ll live off once she retires - anyone who has been on MN a while know’s she’s er ... ‘ comfortably off.’ grin

AssangesCat Mon 22-Apr-19 14:25:03

I'm reminded of visiting friends recently. DH snorted when he saw their cars and explained later. Whenever he meets this friend for a drink, the friend talks about skint he is. Friend and wife have modest jobs and modest home, but one brand new and one two year old car on the driveway. Our household income is quite possibly twice theirs and we share a twelve year old Focus and live in a flat. We don't have to worry about getting a round in at the pub. We all have different priorities, I'm sure our friends can't understand why we don't buy a house.

AssangesCat Mon 22-Apr-19 14:19:42

How are you needing 3-4k for self catering house in Europe? We have stayed in lovely houses in Europe for less than a third of that. We have only 1 DC but we often have two or three spare beds in self catering accommodation.

I wonder if it's because you're flying - but your DH is apparently amassing loads of Airmiles - do they actually get used? If you're using Airmiles I'm wondering what kind of ritzy residence you stay in that costs so much. When we lived in South of England we would get the ferry to Calais for not very much, then you can take all the stuff you want and save on car hire. We're in Scotland now but I'm sure we could still get flights for less than you're paying. I suspect the Airmiles are actually costing you money, a false economy at the very least.

Eurocamp out of high season has done us a lovely week self catering in Spain for about 10% of what you're spending.

I suspect you have more expensive tastes than you realize.

Tiredand Mon 22-Apr-19 12:36:35

By my calculations even if one earner is one £100K and the other nothing (worst case scenario) then take home should be £5,500 per month. If you take off mortgage of £1300 then thats' £4,200. Take off £300 childcare and that's £3,900 per month.

Thats a lot of money, so either your partner is hiding some from you or a lot of luxuries have crept in. Unless your spending too much on cars (easy for people to do) then you should be able to live very nicely.

Maybe list what you spend on each category for more advice. From what I see people tend to overspend on cars (PCP's and leases) to keep up with the joneses, and on food (ready meals, "finest") generally.

We've lived comfortably on a lot less than you've got coming in.

Alsohuman Mon 22-Apr-19 12:34:32

How anyone can complain that they’re over taxed when they haven’t even got the commonsense to minimise their tax bill by paying the maximum into a pension is beyond me. No pension, no savings, what do you intend to live on when you’re too old to work @Xenia? And don’t tell me you’ll carry on until you drop because there’s no guarantee you won’t develop a life changing illness.

Xenia Mon 22-Apr-19 11:32:06

It is always interesting hearing about what people spend. After paying a mortgage since 1984 which reached £90k a year cost at one point (!!!!) I now don't have one and nor do I have child care although the twins cost £50k at university a year now (no student loans - my choice) so there always seems to be something new big and expensive that rears its head as the years go by. I certainly feel a massive difference now in not having a mortgage (or rent) any more nor for the rest of my life too - I am over 50 now so a different life stage from those with childcare and small children.

I don't spend much other than on the twins and a family holiday (I am taking 9 of us to Italy for a week in June). In fact I ordered some more clothes today and so rare is that that my bank queried it as potentially fraudulent.

I agree with the point above about number of children making a difference. I knew when we had 5 that would be 5x what a parent of one would have to spend but that's fine. There is not much more I would have wanted to have done or had than have the children. It is not as if I am weeping into my pillow that I have a £12 Argos watch or now jewellery or no yacht or anything like that.

I was scanning my old diaries last year and even at univesrity I had a daily record of what I spent so I think I have always been interseted in tracking money and income and expenses etc but lots of people aren't. Even if you hate it it is a good idea to keep an eye on where the money goes.

NoSquirrels Sun 21-Apr-19 23:25:02

But apart from housing and eating + the cars, we don't spend more than 500 pounds a month on extras. And this covers all clothing, school extras, theaters, concerts, and holidays.

Really? Whilst you also had 3 5xday European trips away last year? You spent only £6,000 on EVERYTHING else apart from transport, housing and food? Perhaps it is the difference of only 1 child - we certainly spend more. Even "school extras" for the kids are expensive e.g. piano lessons etc.

NC29 Sun 21-Apr-19 22:53:34

Interesting question. We have one teenage kid. When we earned 50k as a household we rented for 2k, had holidays (going back to home country, staying at my parent's lakeside house), and we could afford coffee, hairdresser,.... No childcare costs as one of us always worked flexi enough to manage. Eg. I took morning school runs, DH went in really early to make the afternoon one.
We had 2 small and old cars.
For the past 2 years our income is above 100k, I'm a sahm since then as this job is not flexi and I need to take on everything.
Now we moved to a new flat (3k/month, but huge) in a very nice area in zone 3, bought a bigger/newer family car + a smart for me.
And last year me and my son traveled for 3 months by car around europe, plus had 3 5-day family breaks in europe.
Plus we now have savings in the 5 figures, which we never had before.
I do proper bookkeeping for our in/outgoings every month. I tag all outgoings then pivot to see what we spend on.
Unfortunately more than 50% is solely on rent. even our travels last year (they were a one off luxury) came nowhere close.
So even if you have +2 kids, but only pay a fraction for housing I'd suggest you do your books and see where the money goes.
We live comfortably, buy meat at a butcher, not a supermarket, eat healthy. And our grocery bill at the end of the month is high. But apart from housing and eating + the cars, we don't spend more than 500 pounds a month on extras. And this covers all clothing, school extras, theaters, concerts, and holidays. So with 100k you should be able to have savings and holidays.

fancynancyclancy Sat 20-Apr-19 12:39:24

The issue is housing & childcare. It is a good salary & when looking at averages high but it just doesn’t go very far any more. Take any road near me (SW London) & you will have people who bought 50 years ago & are now retired with a healthy pension & maybe some money from equity release. You then have families with an income of 50k who got on the ladder in the 90s so have hundreds of pounds of equity & now have a nice house with a tiny mortgage. You then get the professionals on 100k who bought in the last few years with hefty mortgages. Guess who has the least disposable income.

ethelfleda Sat 20-Apr-19 12:01:52

Bunsy absolutely - I feel we have the best of both worlds - short commutes as less traffic, close enough to countryside etc but 30mins max from Birmingham which, less face it, is a much nicer city than London anyway wink

<runs away before getting a beating>

Xenia Sat 20-Apr-19 11:55:15

If MeandT thinks they are undertaxed they can always send some of the money my way. i can find a useful home for it. I feel over taxed, not undertaxed and no savings, no pensions etc but then that's my choice - eg am choosing to pay the twins' univesrity costs when most people who have enough money to do that instead burden the state with it. I will await my socialist medal from Corbyn in the post!

I agree that where you live has an impact as someone from the NE who moved to outer London for work although once you have worked for 35 years as I have without a break even when babies come then in some cases you will as I have have paid off the mortgage so that just leaves the £3600 a year council tax etc.

BunsyGirl Sat 20-Apr-19 11:38:00 are so right. I tried to argue this on another thread earlier in the week but I was shot down despite being a Northerner living in the South so I do know what I am talking about. My brother is a teacher in the Midlands and lives comfortably in a three bedroom detached house on his teacher’s salary - he is a single parent with two kids. There’s no way he could do that in the South East!

ThePixieQueen Sat 20-Apr-19 11:03:57

@baydreams does your DH use an expenses app? When I worked as an EA, I found most managers lost their receipts. I ‘trained’ my bosses to photograph and email receipts, to use taxi apps (as they email receipts) etc All financial expenses went to one email address, with one credit card used for business. Between the expenses app, keeping track of receipts and one credit card, they improved their expense claims.

ethelfleda Sat 20-Apr-19 10:56:10

I’ve recommended this book a lot on here lately because I found it almost life changing with regards to money and how you spend it - it’s called ‘the art of frugal hedonism’ and I recommend reading it.

ethelfleda Sat 20-Apr-19 10:48:55

Someone said on here the other day that they find it strange that so many people on mn earn £100k when it puts them in the top 1% of earners...
the more I read this type of post the luckier I think we are. We are in the midlands - joint income £86k and we have quite a lot of disposable income. I’m so glad I don’t live in the south - what you have to pay for a house is ridiculous and keeps you trapped in the rat race.

SweetMarmalade Sat 20-Apr-19 10:36:42

Baydreams, I don’t think you’re coming across as ‘poor me’ I think you’ve put a genuine question to others on AIBU, in a way which is mindful of others (like myself) not in the same earning bracket.

Even though we earn less, we too tend to spend more when dh earns more. We haven’t saved when things like after school club expenses ceased, instead we tend to think we can now afford that tutor for Ds, which is money well spent but not a necessity.

I know where our money gets flittered away, the supermarket!
I don’t do one big shop, I work near to one of the big chains and can walk up in my lunch break. So for three days a week I just buy what we need for that evening, or that’s what I should do but I don’t! There’s always something else I ‘need’! I’ll then go to the more ‘luxurious’ supermarket chains on my days off hmm I’m embarrassed by how much this all must add up to. This is something I definitely need to fix.

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