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How do some people achieve a seemingly high standard of living on lowish incomes?(123 Posts)
I posted this in the Credit Crunch thread too.
I've noticed that people on the same incomes seem to have very different standards of living. I know of people with similar incomes, who live in similar houses with the same number of kids who have very different lifestyles. None of them have run up massive credit card debts, so it must come down to spending patterns.
If you think you manage a better standard of living than people would expect for your income, I'd love to know your secrets on how to achieve it.
I think it just depends what you choose to spend your money on - I'm a SAHM, DH is low earner but we can afford to do a reasonable amount of socialising because we keep our bills low eg weekly shop has never cost over £50 including nappies, cleaning products etc. We can't afford big holidays, but we go to a lot of gigs, out for a nice meal with DS at least once a month, the things that matter to us.
It all boils down to when you bought your house. If you bought over 10 years ago, you will have a lower mortgage than if you bought the same house last year. They may also get financial help from family members or have savings / inheritance. I have none of these things op, so I know how you feel.
It is down to choices of what they spend their money on.
People on here seem to have crazy incomes and struggle for some reason.
We have foriegn holidays, smart phones, sky, trips to lots of places on a mumsnet lowish income but we are good at food shopping
We dont buy many clothes.
I ebay everything we dont need
I get the childrens bits from facebook buy and sell
I have a friend whose family is on a single (not vast) income. They prioritise what they spend their money on so their home is beautiful, children have low material expectations but have v high quality family life and "enriching" experiences, they have fairly simple holidays that are within a budget. And they're very savvy.
Very good at doing things themselves, so where I need to pay someone to decorate if I want it to look as though a five-year-old hasn't done it, they are able to create a home that would fit into House & Garden magazine just by doing it themselves.
Our standard of living probably looks pretty good - eating out, weekends away, 2+ 'big' hols a year. I'm a teacher who is still working my way up the payscale and DP is 'skilled manual' so we don't earn bucketloads.
I'm very good at getting deals - our last holidays have been wholly or partly paid for in clubcard points or avios - it looks like I am spending thousands on longhaul flights but they cost me peanuts. (Just recently, if you exchanged Avios you could get European flights at Feb half term for £1 each, including all taxes/fees.)
I get good advance deals for hotels in their sales (recently a London Holiday Inn for £25/night), and we'll go to the National Theatre on their £12 tickets. When we eat out it will be using vouchers or a tastecard for 50% off.
However, we have a modest house (and thus a modest mortgage), drive ancient bangers, and I suspect the biggest moneysaver is that we do not have dependant children!
When I found out that I was pg with ds2 I was torn between absolute joy (we'd been ttc for years) and terror as I couldn't see how our income was going to stretch to another mat leave and a return to paying nursery fees since dh's income had dropped considerably since ds1 was small.
Anyway, 9 months of me taking complete control of our finances and being utterly ruthless with our spending led to:
- overdraft paid off (£500)
- credit card paid off (nearly 2k balance)
- savings equaling 3 months SMP put away to cover unpaid leave
- deposit and 1st month's nursery fee saved
6 months on employer's maternity pay plus 3 months me back at work and dh on paternity leave at SMP rate and enough saved to:
- do up flat (new IKEA units fitted by us, new flooring throughout) saved/spent
- pay estate agents upfront fees
- buy items of furniture needed for new, bigger flat
If you'd asked me 18months ago if we had these sums of money within our disposable income then I'd have laughed in your face. I didn't think we were frittering away thousands and couldn't understand why other people seemed to have better lifestyles than us on similar levels of income.
We were kidding ourselves and being incredibly wasteful. Life is a lot better now. We have a small mortgage though, which made it much easier to make economies.
Sleepy that is so impressive. I've always wondered how much difference small economies can make overall.
What about overpaying the mortgage? Has anyone done that over a long period and known how much they have saved? I know one family with the parents aged about 40 who are now mortgage free living in Surrey. They are not huge earners. We have a similar income but will be paying a mortgage for another 17 years. They have not had an inheritance or anything like that, so I assume they must have overpaid. I just wonder how much you would need to overpay by to make a big difference.
Of course, those mortgage free friends still don't seem to be having a better lifestyle. Bet they are squirrelling the money for retirement.
Some people don't pay off their mortgage, just the interest. Some use grants, gifts, benefits and other help and dont tell anyone else about it. They might get free childcare, money or gifts and food or work done for them by a relative. They might be really good at shopping around and buying cheap, while selling off their old stuff and getting a good price. It all adds up. Plus keeping heating off durung the day, not buying masses of clothes for DCs and keeping qashing down to one a day. That's how I've seen others do it.
I find I save lots of money when we are both working lots as noone is in and no one is buying anything.
Some people I think on lower incomes than us spend astounding amounts of money on stuff I spend pennies on. Totally valid choice in most cases, but it has consequences for how much money is left for other things.
Family money. My next door neighbour earns next to nothing, and her husband's family owns a shop - he's just found out he's only being paid a tiny bit more than one of the assistants. Their standard of living is amazing though - 2 properties (one is the same size as ours - 4 bed detached, the other is rented out), 2 fancy schmancy cars paid for with some of their savings, biiiiiig holidays every year, no end of disposable income for all manner of things the rest of the year. His family are loaded though, and he's an only child - so I imagine they are mainly living off family money .
A lot of it comes down to choices, priorities and the personal definition of 'essential' vs 'luxury'. Thrift!! Some are dead happy running an old car, recycling clothes, shopping at car boots and eating soup if it means they can overpay the mortgage. Others not so much
I can see it does come down to priorities and appearances can be deceptive. As a child, my parents were very thrifty. They saved like mad and did not like to spend money. In terms of clothes, cars and household goods like videos and dishwashers, we looked quite poor or at least as if our standard of living was quite low.
However, my Dad retired at about 53 (due to their thriftiness) and since then my parents have bought a big house in an expensive area and go on lots of holidays. Their standard of living now is much higher than many of their contemporaries who previously lived 'better'
Perhaps it's a question of jam today or jam tomorrow.
Perhaps those with the higher standard of living now won't beagle to maintain it....or perhaps they will.
DH and I have a fairly low salary now (both on p/t hours, low-paid sector) but we worked hard for years to get mortgage free and to build up investments. So on the surface we'd appear to have an impressive standard of living in poorly paid jobs but that is only because we spent years in more demanding roles. We are also very sensible with what we do spend, we enjoy a lot of leisure activities but we shop around for the best deals/use schemes like saving up airmiles etc. We overpaid our mortgage by 50% plus all our bonuses to clear it in 12 years, that meant being very savvy and not giving into pressure to spend money for the sake of it.
I also think it is down to whether you own your house (and if so when you bought it) or if you rent whether that is privately or social housing.
Another big thing for me is petrol, so if I lived nearer work I would have significantly more income left to spend.
I think compared to petrol and housing smaller choices (eating out, new clothes etc) are quite insignificant.
Agree with Manatee
The biggies are - mortgage (when you bought, where you bought), childcare (having relatives to take on this task, even some of the time you're at work, can save you literally thousands over the years), and commuting costs (having to run 2 cars just so you can actually get to work is a massive drain). Everything else is minor really.
The lower the fixed costs- the greater the disposable income.
So yy to everyone who mentioned property/housing costs
Also- avoiding getting caught in credit obligations
We have low for mumsnet income- actually quite high in real life and don't have to be careful. We go on nice holidays and days out, occasional meals out etc.
I won't insult your intelligence by pretending we do it all by careful planning. DHs family gave us the deposit for our flat and a 2nd hand car. Without this we would havemuch higher monthley outgoings.
It helps that we haven't been stupid with their gift: we bought a modest ex LA flat on an estate to keep monthley mortgage payments low. We also buy furniture and other big ticket items 2nd hand and clothes from 2nd hand shops or ASDA. But basically, its down to a hand up from family
I think it is managing to get your outgoings to a minimum, then you can survive on a low income which is then topped up with tax credits.
That's how we have managed it.
This has given us a higher disposable income than many families we know who earn 3x what we do.
We have one old car, a sahp, holidays during term time, no childcare, no sky, no mortgage or rent. We spend our money on the things we feel are important to us.
If you have no childcare, no mortgage or rent then you are incredibly lucky, esp. if you're living on one low income
I know this is never a popular reply but:
I am really grateful to be where we are but certainly don't put it all down to good luck. I know we haven't had a lot of bad luck either but things haven't always gone smoothly and could have been better.
We were lucky that our children were all born healthy. We were very lucky when tax credits came in.
But in terms of finance it really was a case of not spending a penny that wasn't necessary and certainly no luxuries.
We managed to save because we were so frugal, but interest rates could have been better when we finally were able to save, that certainly was unlucky, when they had been so high when we were paying a mortgage.
I don't think its a lifestyle for many as you both have to be completely together to make it work otherwise resentment would surely set in.
We just thought it worked for "Tom and Barbara" "The Good Life" so it could work for us too.
It just shows that early advantages (often given by parents etc, such as paying a house deposit) create bigger advantages later. I am convinced that one of the best things I could do for my DC is to help them get on the property ladder early, if at all possible. Dont know if I will be able to afford it, but I would like to.
One thing which happened to my husband, was that he and his siblings were each left £20,000 by The first grandparent who died, when the grandchildren were in their mid 20s back in the mid 1990s. That allowed them to put down deposits on houses or flats they wouldn't have otherwise been able to have. They all got ahead with property and bought about 5 years before their peers.
Most Grandparents leave everything first to their spouse and then to their children. Actually, it is often the Grandchildren who can extract most long term benefit from the money. Realise not all Grandparents in a position to leave their money in that way.
I know many people on at least double our family income who struggle and don't do many leisure activities as they are always "skint". We are able to eat out , go to gigs, theatre, cinema etc on a regular basis. They always wonder how we do it considering I only work 15 hours a week and have 2dcs. My dh works full time.They are all childless.
The difference that I can see is that they have taken on big mortgages and get everything on finance/loans. Where as we do not have a large mortgage out of choice as I value being able to do leisure activities/having disposable income over a bigger house or in a "better" area. They also go on expensive holidays abroad while we have 2/3 holidays in the uk on a small ish budget. I think generally housing is the main thing and people tend to take on the biggest mortgage they can. I feel that 20-30 years is a long time to be "skint". Also we are lucky that we have no childcare costs. It just comes down to what people prioritise in life I think and lots of people do get family help too.
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