To Q why many high earners still live paycheque to paycheque?

My husband is a high earner, I earn an average amount. When our initial relationship became more serious, and we first made a monthly budget/shared finances info, I was really shocked at his spending vs his savings.

It was lifestyle creep for him in the finance bubble, plus living alone renting a nice 2-bed London flat, travelling, eating out all the time, and enjoyed his money/life/experiences after growing up quite poor. I don't really blame him, but it was a shock to me as I am the polar opposite & quite frugal.

I don't believe there's any reason someone on over £100K should be 'struggling'. Realistically they are 'struggling' to keep up with their social circle who may have private/prep school/beautiful holidays/new cars on finance/new kitchen/huge mortgage, but they shouldn't objectively be struggling and living paycheck to paycheck?. I do however accept nursery fees are a killer.

Now, with our combined income, I manage our finances, we are able to live on his wage alone, and save all of mine. Security is important to us, we could have bought a flashier house and maxxed our mortgage affordability, brand new cars (we have two old fords paid off), and renovated our house quicker, but we choose to have savings in the bank and don't care about keeping up with the jones'. I don't see how people in our position are living paycheck to paycheck, we've never had any family help financially either, we've just learned to cut our cloth appropriately.

I would say they are idiots, who think they are 'entitled' to have whatever they want, whenever they want, rather than being prudent. Plenty of them about.

I do at the moment, yes, but my own fault really, I don't know where it goes and I don't make enough effort to control it. I earn about £6500 after tax each month and support a family of five. £1500 mortgage, £1000 bills, £260 cleaning, £100 car maintenance , £200 fuel, £75 gym, £ £500 kids activities, £100 eating out, £600 holidays, £800 food, £200 hobbies, £90 tube fares, £70 mobiles...still doesn't add up to £6500 though. From a quick review, it looks like we overspent on kids stuff over the summer holidays, loads of activities and clothes and days out that have ended up in overdraft.

I do wonder if it is this. I've had several affluent friends claiming they can ' only just about afford their mortgage', yet always eat out on family day trips, regularly eat out with friends, have lots of leisure activities that cost money and go on several holidays a year.

I remember my first job in London I was on about 22k before tax and then went to 55k in 3 years.
I thought I would feel richer and I did not. In fact I had bigger debts. And none of it was “being thick”. It was purely life style creep and also having a poor approach to managing my finances. (I strangely told myself I did not earn enough to save, so I did not, but did earn enough to pay for the experiences I valued in life such as travel and time with friends).

Fast forward years later and I am much better with finances. I still live pay cheque to pay cheque but that is because I put about 25% of my post tax income into savings and investments.

I still am not on the property ladder but that is a direct consequence of old me’s behaviour. But if I had children I could imagine living pay cheque to pay cheque as I would want to have private school, would need childcare etc.

But most importantly life style changes as you earn more.

If the government was looking to give the economy a massive boost, free state childcare would do it. There would be a huge amount of spending power unlocked that's currently going on nursery fees.

I work in London, in financial services. For those without inheritance or family help, main expenses stem from,

1. House prices (lets say £4k a month for mortgage and council tax and utilities)

1. Childcare and School fees (this is not a debate about private vs state, just a factual statement for those who already choose to pay plus VAT. Say £5k a month, 2 kids)

1. Cost of living: household help or leisure cost, nice all inclusive holidays £8k, as you can only do a particular week in August. Kid has a party £500. Cleaners charge £20/hour. Groceries maybe £500 a month. Chain restaurant meal at Nandos may cost £100 for family of 5. School Holiday camp £600 a week for 3 kids. Or £2k per month for 4 days nursery. Let's say £3k a month.

That's £12k a month from after tax pay.

For singles they have a fabulous time travelling, restaurants, all sorts of entertainment. All the parents at my work live vicariously through single people. If they save well (without having to sacrifice too much) it is very possible for childless high earners to retire in their 40s. But they usually

I did for years because I grew up in a frugal low income household and for me one of the benefits of a high income was not having to think about money. If I wanted something (e.g. private schooling or another DC - I was never one for expensive 'stuff') I didn't ever consider the cost just went ahead and did it.

Exactly, and most high earners living to the edge of their overdraft every month without these securities in place are very few and far between. So the posts of 'they are thick as pig shit' and 'just goes to show you don't need to be bright to get a high earning job' are rather ridiculous.

As I said above, we currently don't have any savings at the end of the month, but we have around £300-320k in a mixture of assets, savings and investments. I'm not trying to brag (though when you're directly being called 'as thick as pig shit, then no, I'm not pulling any punches) – I'm just being transparent and showing that we have been financially savvy enough to make sure that is in place before we have considered spending on things that take us to the edge. High earners also tend to have very robust insurance and mortgage protections in place because they can afford them.

Saying that, 'over £100k' isn't very descriptive for what a 'high earner' means. There is a very big difference between a family on £100k and one on £200k, and what they have likely been able to put in place for security.

Totally agree, and I did acknowledge that. 2 of ours are at school now, but even nursery and wraparound is more than our mortgage, and more than I earn. But then I suppose we wouldn't have chosen to have 3 DC were we paying for childcare. Ultimately, number of DC, size of house etc are all choices, £100k is still a very decent income.

Because they set a lifestyle based on an income and inflation has hit. My average costs went up by over £500 a month a year or so ago (childcare and mortgage both jumped 10%). How many people think they'll need over 10% spare in the budget?

I think it's called "living within your means". So if you earn 25k, then you live within that, if you earn 125k then you live within that. Everything is relative depending on your income and outgoings

Yes, that’s it. I use the wine example. As a poor student you buy a bottle of $5 wine, because that’s what you can afford. When you leave uni and get a graduate job you buy a $7.50 one. You then get a promotion so it you now but a $10 bottle. You advance up the ranks and buy the $20 bottle, then $50 bottle. You don’t end up earning a high salary and buying a $5 bottle of wine and saving the $45, because you can ‘afford’ the $50 bottle.

I'm a single mum of twins.

My mortgage, for a small 3-bed semi-d is 2,500 per month. My childcare bill is 2,800 per month.
Luckily I'm a very high earner, so not living paycheck to paycheck, but I can easily see how someone on 100k doesn't have any money spare if they have childcare and a big mortgage.

The point is so many people seem to get good jobs in London, but then mortgage them selves to the eye balls in the most expensive area of the country and have multiple children where nursery fees cost ££££ and then wonder why they have no money. I don't get it. Sorry.

People in London aren’t having multiple dc hence why schools are closing. And a mortgage is often cheaper and definitely more secure than renting.

Its the childcare that’s the killer - it’s like having two mortgages.

You have 3 DC. Let’s say they are two years apart - that means you might have 4 years during which you are spending £4,000pcm on childcare. That’s going to be over half your income, even on £120k.

Without childcare expenses, you suddenly ‘free up’ almost £50k annually in spare money. Which is a massive amount - your lifestyle and ability to save would look very different!

Oh my god, it's like people living on £50k per year in/ near London don't exist 😂 You do realise the average salary in London is significantly less than £100k? You don't have to believe me, its fine

I know loads that do but loads aren’t paying todays mortgage & childcare costs.

Our household income is around £120k (most of that is DH). After expenses (mortgage, bills, commute, food, car, loan repayments etc) we have about £1500 a month left to save or spend frivolously - we usually save or invest £700ish. We have 3 DC, live in SE, DH commutes into London daily. We live a nice, but not extravagant lifestyle. I can see how things might be very tight if we had childcare or student loans to pay for, but I do think lifestyle creep is the main culprit. £100k+ is not a vast sum, but it is plenty unless you acquire expensive tastes.

My DP earns just over this, and we have 5 children, student loans, overdue debts and teenagers that eat more than we do (Tesco bill comes to £200+ every week, we all eat different things). We are just breaking even, and have to cut back as oldest is hoping to go to university in 2 years.

I keep thinking we should be feeling more secure, but we don’t.

Hmm. Last time we painted our living room, it took us a weekend. That was with breaks and not constant work. The quality may well have been better had a professional decorator done it, but it looks good enough for us. My dad worked as a painter/decorator (and all sorts of other things) and taught me how to do it, so I've got some knowledge and it was pretty easy!

DC got involved and loved it. We had "camping out" meals and turned it into an adventure.

We'd never laid carpet before either or done tiling, but we just Google and ask advice from people we know. It always comes out looking fine and it's never taken huge swathes of time. We'd probably not decorate a whole house in one go, though, unless we moved somewhere else and it needed it. Then that would be done for X amount of years, possibly repainting another room another colour if we wanted a change.

This is a really relevant point. There’s a big difference between running out of money at the end of the month but having money in savings etc, and running out of money and having no savings to tide you over or find any unexpected costs. Both are technically living ‘paycheque to paycheque’, but one has a lot more security than the other.

Personally I wouldn’t go that far, 100k isn’t nothing but people on household incomes of say 40/50k underestimate the difference in take him at the end of the day between their “low” salary but plus child benefit, funded nursery hours, a small amount of universal credit and a housing allowance vs the take home of a household on say 110k.
Take home after all benefits are accounted for is nowhere near as vast as people first expect who just think 100k = millionaire.

Exactly! Private rent is never ending circle. It's impossible to save a deposit while paying high rent. 100K is nothing when you do not own your home, when you don't have any relatives, who can help you with a deposit and when you won't benefit from any will.

@Bibbledibble no, that’s not what anyone has said.

I think unless you can outline how you funded a mortgage, full time childcare and a long commute comfortably - it’s difficult to take your criticisms of others spending too seriously.

No one is saying they don’t exist, but people on a household income of 50k in London will be bare bones if they have kids or are in the private rental sector or are paying a mortgage.
Lower incomes can skew the reality of living costs due to top up benefits and particularly housing and childcare benefits.

Oh my god, it's like people living on £50k per year in/ near London don't exist 😂 You do realise the average salary in London is significantly less than £100k? You don't have to believe me, its fine