Higher middle earners- how do you afford your fancy life?

[Led921900]

This is very much a tongue in cheek post … and yes I might be crying in my Tesco finest Prosecco but….

I live in London and there are smallish but relatively expensive houses around me that sell for about £1.1 million… inhabited by 2 parent 2 children families with nice cars, bugaboos and doodle dogs who go on all inclusive foreign holidays. How???

It’s not that unusual…. whereas we have a household income of about £140k which I thought was pretty good and I don’t feel like we’re doing particularly well at all. No prospect of upsizing our house, no fancy cars, no foreign holidays at an algarve all inclusive. I have had 3 kids but my childcare is cheap (£55 nursery a day full time) and to be honest when the kids are school age the childcare difference between 2 or 3 kids is hardly anything.

So how are you all doing it? It’s no fancy extensions for us, no upsizing to a nice house, no fancy cars (running a cheap Citroen) and our fancy foreign holiday is driving 10 hours to a nice Eurocamp caravan with air conditioning.

Is it…

1. Bank of mum and dad or inheritance has allowed you to afford a nice house with small mortgage?

2. Not having kids?

3. A very well paid job (if so, what and what earnings?).

My background is working class northerner but I can’t see the lifestyle we have now on a very good income is any different than what my parents could afford with us! And I’ve looked at my job elsewhere and the cut in earnings is more than the lower mortgage (although actually houses in nice areas near good schools i. Wirral/manchester are about the same as mine anyway!)

I don’t get it?

A £2k mortgage seems huge to me

it really isn’t, many will be paying a similar amount on a lower income but renting.

@Led921900 this thread shows why social mobility is going backwards in the UK!

Move out of London, life does exist beyond the M25 🤷‍♀️

with my own kids though if this whole cycle is generational wealth etc can’t see them getting much from anyone and house prices keep going up so it’s going to get worse?
Not sure how to break it for them except 1) let them live in the house and work in London and bank the saved money as rent but kind of feel that is limiting their independence somewhat! 2) get them thinking about lucrative career paths like aiming for a “big 4” grad scheme which I think in my work seems to land you in the big jobs 3) get them to target generic careers where they can move to cheaper area? (Personally there’s a big penalty for my salary leaving London 20-40%)

Generational wealth will be the answer to lots of this. The bank of mum and dad helped them buy a first property quite young, whilst prices were (although it didn't feel like it at the time), relatively low at least 15 years ago. They could live at home whilst getting started in their London careers, as mum and dad also live within commuting distance of London. The bank of mum and dad probably still helps with those holidays, particularly if they're also going with them and/or they have a holiday home abroad. They probably earn very well (a lot more than £140k between them), the bank of mum and dad supported them though university, and mum and dad created a home environment where going to a good university to do a good degree that would allow a good salary was a given. Mum and dad probably helped them get work experience/a first job via their connections. A lot of what you observe can easily be explained by how wealthy the parents are, where they also live (i.e. London or the Home Counties), and what they do for a living.

It’s like on location location location where there is a marketing manager and someone who works in hr and they have a budget of 3 million pounds for their new home. There is no rhyme or reason to why some very average people are minted. We’re trying to be the first generation in our family that enables our dc to have generational wealth so hopefully they can be dozy middle class duffers who have it all 😁

Often people who seem much better off had kids at a later age, having built up a bit of savings/climbed career ladder/knocked a good bit of capital off mortgage. or sometimes the woman is average age for kids, but the man much older and therefore richer.

I have to disagree with you re the price of 3 kids vs 2. Everything adds up and I do think it’s quite significant. Especially for a holiday.

I wish my mortgage was only £2k 🤣

with my own kids though if this whole cycle is generational wealth etc can’t see them getting much from anyone and house prices keep going up so it’s going to get worse?

London house prices have not performed well vs other places in the UK for a while now particularly flats so things will slow down as people won’t have the equity & London birth rates are pretty low, quite a few schools closing & merging.

I know what you mean, we have an income of about £140k, I guess it’s about the same as my parents had & they put 3 kids through private school!

For us personally we had kids too young & had too many of them (3), think that’s been an impact.

That will impact house prices in time too.

@Viewfrommyhouse assuming you have a bigger mortgage than £2k, I assume you earn more than £170k? It's all relative I suppose. A £2k mortgage seems huge to me on a combined salary of £140k because we earn more with a smaller mortgage.

100% it’s the bank of mum & dad - most of my friends were gifted chunky deposits towards their properties which means bigger houses and lower monthly mortgage payments compared to us. So even though we bring home more as a household we have less disposable income.

I also think future governments are going to come after some of that older housing wealth either indirectly or directly eg the cost of care, NHS shrinking, or increased teases. It’s inevitable as the country is broke with an ageing population but there is already quite a high burden on income taxes.

@Led921900I wouldn't worry about limiting your DCs independence by letting them live with you whilst they save for a properly. Ime it's very normal to move away for uni, then back home whilst saving for a house deposit. I think most people with parents who have a house in London do that, at least those who don't just get given a massive deposit do.

Yes, household income is more than that. We do also have a shorter term (14 years/11 left).

It can all be a front, my mil lives modestly, not frugally as such but sensibly, there’s millions in the bank. My sil looks like she’s on millions, the house, the cars, the designer watches, the holidays..,, yet it’s all a front, it’s all on credit, and they don’t have a penny left and complain how poor they are, despite very good London jobs.

We have a household income of £120k and live up north where property is cheaper. However we have never had any inheritance or help from parents and so everything we own has been worked for.

We holiday in small cottages in the UK, we drive mid range cars on finance and we don’t live extravagantly at all. Without help for housing the mortgage saps a lot of our incomes.

We have inherited enough that we have a nice house with a low mortgage, but before we inherited we had a small house on a fairly small mortgage, having seen my parents stress over their mortgage I never wanted to be in the position were we were over stretched. Childcare costs drop quite considerably when they start secondary, essentially there just aren't many options.

We did holidays when we were earning less by driving and renting caravan or villas, so we still did holidays, but I do think a classic package holiday is very extravagant. We are earning a bit less than you and I don't know many people with school age kids who goes on a package style foreign holiday every year. This year we did a few days in Tenerife self-catering in Feb and we are doing a couple nights in Paris in the summer. In other years we've got a caravan in Wales or driven over to France.

We are much more comfortable now than we were 10 years ago and we spend far more on take-aways, meals out and our weekly food shop than we used to. I used to buy clothes only when I needed them and always on sale whereas now I will buy a new outfit a couple of times a year. I'm not living the high life, but not having to worry about money is a real luxury I'm very grateful for.

That said there is definitely a group of very rich people in this country who have the fancy car, send kids to fancy schools and have a big house and that just isn't obtainable for most people without family money and connections. Inequality has definitely got worse over the last 40 years.

I don't live in London, I don't have kids or pets and I don't have car. That helps to live quite decently with above average salary.

A £385k mortgage over 25 years at 4.5% is £2.1k a month. Add a 10% deposit on that’s only a £425k house. That’s literally a 2 bed flat if you’re lucky in London! Reasonable family houses in south east London are £650k. So say you managed to save or inherit £65k like my kids and their future partner might that’s a £3.3k mortgage before you do anything else! That’s more than my husband brings home on his salary alone.

Btw we’re not struggling definitely not. Can afford the swimming lessons, piano lessons, family holiday (albeit eurocamp), eating out a few times a month. It’s the unexpected which gets us the £200 car tax bill that lands. My ageing and now chronically ill cat that’s costing me £200 a month on palliative care drugs And specialist food for who knows how long (they cost a lot more but insurance covers the rest and she’s my cat of 15 years!). Going for a short break to Dubai for my 40th a mini break to Rome with my husband for the same.

But my mates parents were a GP and accountant. They had a full time nanny for three kids lived in Kew, when she was a teenager they bought a second home in there new forest. There’s no way a GP and accountant (with no family help) could afford all that now!

Our annual household income is about £180k. We go on fancy holidays and the DC have expensive hobbies but go to state schools. My car is new but it's a company car, so not a financial asset.

We live in the same mid-terrace, 3 bed, 1 bath house I bought 15 years ago when I was in my early 20's. DH also owns a flat from before he met me. Both easily commutable to central London but in towns with a bad rep. The mortgages on both are due to be paid off in ~3 years. I would love to move to a nicer area but the DC are settled at school and with long-term friendship groups so it's not a priority. Right now we're just enjoying throwing money at having fun with them before they're out of their teens.

I think we're a combination of buying young and in my case, my parents gave me the deposit. I had DC very young and was a single mum in my overdraft every month but stuck with my career. My parents are extremely generous with childcare and I also had child tax credits until my salary increased enough not to qualify for them. I put myself through an OU degree when the DC were small and finished paying off my student loan last year, which freed up a chunk of money every month.

I feel incredibly lucky in my family, opportunities for career progression and buying a house when I did.

So true. We don't have new cars, or multiple holidays, but we also haven't borrowed any money for anything (other than our mortgage) - our cars are paid cash, as are our house refurb costs (total refurb, paid for with savings rather than a loan or remortgage). We also only have 1 dc and didn't have them until we could afford comfortably for me not to go back to work. It's all about choices and sacrifices.

Btw north west jobs were paid £60k so thats a 40% pay cut and the mortgage did not cost £40k a year less!! So sure there is life outside of London and I tried to leave but the sums didn’t make sense either.

Definitely encourage them to pursue lucrative careers if you want them to have a certain standard of lifestyle. It's either that or inheritance, no way around it. That said I'm not sure big 4 is the best example of it, something like SWE/analyst at a hedge fund is more 'lucrative'