Achieving a better standard of living that your income suggests(81 Posts)
I notice that people who have similar household incomes, family size and house size in the same area often seem to have very different standards of living.
My question is how do those who seem to have the higher standard of living achieve it? I'd like to know their secrets which allow them to have this.
Just as an example I'm thinking of a family which have an income of around £60,000 in Surrey and who manage have holidays and privately educate their child. How do they achieve that when lots of people with much more seem to have neither?
I agree that where you get your childcare from makes a big difference. We currently pay £880 a month for one child, full time. If grandparents were closer and able to help out even half the time we'd be rolling in it (or at least able to afford to pay off some debts).
Family background (ie cash) makes for a huge variety in lifestyle on the same salary. Ditto size of mortgage. Free childcare from relations helps a lot.
But budgeting hard for food/energy and not buying coffees out really doesn't make that much of a difference. Except after 20 (joyless) years where you do make a bit.
I think that if people overpay their mortgage by a small or sizeable amount each month, from an early stage (especially in pre child days when incomes are often higher) then they are mortgage free or able to significantly reduce their payments at crucial points. This often makes them able to afford a higher standard of living.
Some people are just financially savvy. They do things like this and also make sure their savings get the best returns and avoid paying more than necessary for things. Together it can all mean you can afford a lot more than those who don't make the most of their money. Don't know if its due to parents attitudes to money which get passed down or what the cause of the difference is.
I think a lot of it must come down to parental help or inheritances, as a pp said, cutting down on coffees, isn't going to save the amount needed to live it up like that.
A work colleague is buying a house for £500,000 and earns £30,000. She is a saver, but a mortgage of that size would need hefty savings. I don't know what her partner does, but I don't think he is loaded. They must be getting parental help as I can't think of any other way they could afford it.
I've paid £12-£14k ish per year for the last 6 years on childcare. Over a third of my net income.
Imagine where else that £70k-£80K could have gone?
Obviously there are individuals who just waste money and nearly everyone they know, will have a better standard of living than them, on a similar salary. I had a boyfriend like this once. He could spend a lot of money everyday really on nothing much e.g. expensive leather notebook, a rare record album. He was always skint even though he was earning okay. But this is exceptional.
OP, we never paid any extra off the mortgage as couldn't afford it, we were young when interest rates were 15% ouch
We also weren't given a hand up from anyone except the first mortgage payment from my parents.
We managed it by not spending on anything that wasn't necessary and this just enabled us to survive for a long time.
Then it started to get better and now we consider ourselves very well off, even though we have a very small income.
Now we can afford lots of things and we appreciate it so much more than if we'd had the affordability from the beginning.
You can do it on a low income if you want to do without everything for a long time. Even now we aren't materialistic, but we manage to afford lots of music tuition for dd and Italian tuition.
If you stick with it it is possible. FWIW we have been married for 21 years, together 25 and have 3 dc aged 22, 19 and 10.
I assume those people have no debts and/or low mortgages. We would be very comfortable if it was not for our debts.
Our mortgage is quite high too.
Our neighbours have five dc and the mother does not work. The father works for BT. The dc have literally everything. Their garden has a trampoline, tree house, swings, slide, swimming pool in the summer. They celebrate all birthdays and throw BBQs with lots of alcohol.
I wonder how they do it. I could not even stay at home when we had one dc.
I guess a SAHM saves a lot in childcare costs.
They might brew their own beer/wine.
I think it is the 'invisible' savings like pps have mentioned (ebay, charity shopping), that are balanced by the visible spending.
I think there can be huge variations in disposable income depending on the debts that different families have. Servicing debts - credit cards, loans etc - are expensive and a debt-free family will have a lot more cash to play with. Sadly a lot of couples I know spend a lot of their monthly income paying off debt.
There is also huge variation in the status of people's mortgages and rates. Some families may have done well selling and buying at the ruth time - probably sheer luck.
Recently I've been thinking that the lucky couples are the ones that started early. If you started cohabitating with someone at 25 vs 36 you collectively will save a lot in living costs. If you started working at 18 vs not working until 25 after lots of university (and loads of student loans) you may be quids ahead as well.
Childcare help can also make or break your finances.
I think life history makes a difference. Person A met other half in their late teens/very early twenties, settled down, saved up together, bought a house and paid into it with two incomes for a few years, then started to think about children when they hit 30.
Person B spent their 20's gadding about, looking for love, not finding it, saving for longer to buy a flat alone, living alone with attendant expenses (one income, expenses not much below a couple's, plus possibly going out more), finally meets long-term prospect, but baby clock ticking, so less time to save up for house/future or just to enjoy the years of two incomes and no kids.
Person A would probably be in a better financial position than person B, because (by luck, chance or laziness) they stuck with an early choice of life partner.
williaminajetfighter Soz, cross post. But glad to see someone else thinks this too! I really notice it amongst our friends.
Souperb, great minds...! In all seriousness my DH grew up in very working class area, tough council estate etc. his friends are way ahead of him as they tended to start working at 16 and were settled down by the tune they were 20. Starting to pay a mortgage at 20 vs at 35 has huge ramifications for future finances.
Sadly he was the gadabout and spend all money ever received on having fun... Til he was about 40!
But Trills, if 2 of you do that (and a lot of other similar things) for 20 years you can save up enough to pay for school fees.
One of my friends has 3 children, all privately educated, paid for by her dp's parents.
Another friend gets £7k every Christmas from her grandparents.
My best friend was given £50k by her grandparents when she got married 20 years ago. Her and her dh have been mortgage free for a long time.
So, in my circle, it's parents and gp's that have 'uplifted' my friends' standard of living.
£7k every Christmas!! That would make a big difference if used wisely.
I think you are all right about getting started early. Few of us will be able to do it, but perhaps the best thing we can do for our kids is to help them buy property early, which will put them in that advantageous position 15 years later. Might be better to use the money for that than private school fees???
It depends on your attidude to money from the very beginning:
I graduated with no debt (in 1980s when there were no fees and I had a full grant)
saved money from all my part time university jobs to fund holidays
saved money from full time job and never had any debts or loans
had children after I had been married for 8 years
So not always due to an inheritance or gifts from grandparents
ChocolateWombat It's a nice thought to help kids buy a property early, but unless they have the right attitude it can easily not be an advantage. If they get on the property ladder early, but pay the smallest mortgage they can get away with and squander the rest of their money then it is not such a massive headstart. I have two friends who were massively helped to buy first flats but who have had to sell them to pay off huge debts, thus starting their 30's at ground zero. Easy come, easy go.
*ShanghaiDiva" makes a good point about attitude from the beginning. And I think it is attitude that makes all those tiny, seemingly inconsequential, decisions about coffee out and packed lunches which all add up. Settling down youngish with someone helps to focus that attitude early enough to compound all the benefits by mid-30's.
My DP and I are like Shanghi. We funded the deposit from our first house partly through money my DP earned whilst working part time when still at school. We saved and where careful with money when friends were spending money partying.
But I admit I am a bit jealous that some of those friends who spent money partying are now better off than us because of inheritances and family gifts.
My DP and I both come from very poor families so will never inherit anything. We learned to be thrifty from our families and always knew we would have to rely on ourselves financially as our families do not have money to bail us out.
Souperb, you are of course right. If everything is given to you on a plate, then you might not value it. I'd hope to help my children develop the right attitude to money (although ultimately they will develop their own attitude) and hope to give them a bit of a boost, but one which requires them still to take responsibility. A fine line.
I also would like them to settle down early, not just for the financial reasons listed here. Don't think I will have much control over that though!
Back I. The 90s my parents told me if I saved £10k for a deposit, they would lend me another £10k. Really spurred me on. It was a loan, not a gift, but it made buying possible for me, whereas without it wouldn't have been.
lottery or other win (not jackpot)
rich relative unmarried, no kids and very generous
buying/selling property at right time
saving up for things
not having debts
Having similar attitude to money as partner
generous and helpful (but not rich) parents
a good work ethic
saving at beginning of each month
buying what you desire not what other people have
middle quote/price on most things
worked around dcs so no childcare
inherited a nice but smallish amount at the right time in our lives (when we past the partying/clubbing stage)
paying down mortgage before dcs arrived
not throwing food away
waiting for things
having small economical and shared car
these have been our helpers and we are very lucky
The inheritance and generous relative I am sure made the real difference.
Even a £1k at the right time can make a real difference.
Hi the generous relative has, over the years been the most helpful. It's so kind of them. in fact when we had the win we gave some £ to nephews and nieces (and put some away for dcs obvs.) But would love to be in the position to share a lot out between family and friends.
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