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?

Like a pp pointed out, you have over £5k left a month AFTER childcare and mortgage.

And you can't afford flights/an AI holiday? How? You must be wasting a substantial amount of money each month tbph.

We have in the region of £5k a month incoming before housing. We have 3 dc. They have various paid for activities, we live well. We go on 2-3 holidays a year, one for 10 days abroad every August, usually AI.

I'd be fascinated to hear what exactly you're spending your money on!

I'm single, no kids, no family support, making 50k a year (London). I live with the bare minimum, take one cheap holiday a year, no car (walk to work), buy half of my clothes used on vinted, never eat out (unless invited). I live like a nun and I would define my life as "comfortably surviving". I don't know how people with children do it, bows hat to them.

For us it’s number 3 (one income of 200k).

Going for a short break to Dubai for my 40th a mini break to Rome with my husband for the same

Thought you said poor old you could only afford Eurocamp? 😂

A bit of a weird post, so you are going to Rome, Dubai, a Eurocamp holiday, pay for piano lessons etc and wonder where your money is going.

Wooow, I am always amazed at the earning potential in some relatively young families. DP and I, both long public sector careers, aren't even close to 100k household income and work a stupid number of ours.

We've a lovely, albeit frugal life, but the discrepancies in earnings in Britain are mind-blowing.

And you eat out a few times a month? That’s easily £4-500 a month for a family of 5 in London.

I know exactly the families you mean and I often wonder the same thing. I think there are some hidden factors going on here:

• values. They put less in their pension, kids education or whatever to spend it on buggies and cars

• finance. They buy it all on credit cards and don't own it outright
• timing. They bought their first house before prices soared so had more leverage to buy the next one; or they had one small property each, and bought together when married
• background. They started out wealthier, bought younger, family money etc etc

We have a similar household income to you but we're not quite as you describe. We live in the Midlands in a deprived area and although we have a large house it needs a lot of work and we can't afford to do that. However we do have 2 X brand new vehicles (both purchased through our businesses), we have a BTL property (accidental landlords and we got a really good deal on our current house as it wasn't on the market), we have a house abroad (just been gifted to my DB and I by my mother as she can't manage it anymore) and we have 3 X DC in private school (partially paid for by a relative). However, we don't live extravagantly - shop in Lidl, rarely new clothes etc etc. We had no financial help with deposits and it is only recently that we have been the recipients of generational wealth.

Of our friends who live as you describe - most have money from inheritance along with good salaries spanning their careers.

Agreed.
Either that or zero pension and savings.

We know one couple with two kids and roughly the same income who are living it UP.
Their lifestyle is ours on steroids

£2m house, Nursery x 2 and a nanny 5hrs per day, nice car, nice hols, fancy restaurants, takeout and waitrose.

V vocal about how independent/self made they are...

They difference is they were gifted the deposit for their first place (they repaid the initial loan but made 500k profit on the place when they sold) and dont need to bother with pensions (Neither has ANY pension) as they expect to inherit at least 2m....really more like 5m+

@Led921900 I always say this about those who move to the expensive London commuter towns- you might get a similar house for £130k less but if you are in jobs where you still have to go into London most of the time- can easily spend£860 a month more on commuting between you -same true if you rent- sometimes the sums don't add up - had a friend who was going to move from Kingston to Harpenden- did the sums and stayed put.

Really good point @Knickerknack Lots of people are putting on a good show as well. Keeping up with the Joneses isn’t just a lower middle class thing. There will be lots of people relying on downsizing to fund their pension, or caught out by their parents’ care costs.

Divorce can make it all a very fragile house of cards too.

These threads always attract a solid cohort of posters who can’t believe a decent lifestyle is attributable to anything other than the BOMAD.

the truth is there are tonnes of very normal seeming jobs which pay big salaries and if you pick a street where houses cost upwards of £1m chances are they’ll be occupied by professionals earning those big salaries.

No kids helps a LOT....

We are £170k between us in Scotland.

Mortgage is £1k a month for a very large 4 bed house and it's nearly paid off.

Thats the main difference between London and elsewhere.

Our kids are high school age now so childcare costs are minimal.

That leaves plenty for pensions, savings, great holidays and experiences.

We aren’t based in London but are south east in an expensive place. Our on a main road 4 bed, 3 reception semi with decent garden and parking is worth about £700-750k. Similar on side roads around us was £100-150k more which was why we went for the main road option.

we are both professionals with silly amount of education/qualifications, earn £150-160k gross, would be more if I worked full time. 2 kids.

we have ended up paying for school which wasn’t the plan but state option locally led to us having an unhappy child. Youngest in state but will go to private for secondary I think. This is where we are choose to spend our money - moving would mean long commute for dh who is in his dream job he loves here and PIL live here and increasingly need a bit of practical support.

we have had some help from a legacy from my grandmother and have had hand me down cars from PIL.

You are not a middle earner, at 66k per person puts a person in top 10% of earners. Your view is skewed by living in a wealthy areas. It’s fine to wonder but it’s absolutely not a middle income.

We are past childcare payment years so that makes a huge difference. You missed one thing on your list of how people make money and that’s investing. DH has a job that earns him 65k PA , I have never earned more than 37k PA. We live in a much cheaper part of the country but we have had many successful investments over the years. We have made 25K since the start of this financial year.

I must admit we have never been on an all inclusive holiday but have stayed at friends holiday homes, we are currently in a beautiful country cottage and my frjendship is charging us half the going rate.

I will be honest I’m confused about how you’re not affording that. Your childcare is dirt cheap compared to most!

What are you spending on?

@Led921900 you must be saving a fair whack though?

You are not a middle earner, at 66k per person puts a person in top 10% of earners.

Tbf those statistics are a little skewed as they are likely based on PAYE. A MC law firm partner on 2m a year will be self employed.

We have made 25K since the start of this financial year.

@SweetChilliSauces Im intrigued by this? How much have you paid into the investment & for how long or is it property?

It is ridic, OP! I guess it's cost of living, with a massive serve of housing price increase.

We both earn good salaries and bought our first flat 10 years ago, which has helped. But even then, despite being in the same bracket as my parents at my age, my life isn't like I grew up. Private schools, big house, skiing every year etc etc. I have to pick my spendings!

Our money goes on mainly;
mortgage and bills
food and stuff (clothes, kids classes and fun stuff)
childcare
savings/holidays
car
commuting

I think this is where most people's salaries go. Rent or mortgage, maybe no savings, maybe no childcare. It's the scale of those outgoings which differ HUGELY and frankly, I'm baffled at the number of very high earning households on here (ie. intelligent people?) who fail to understand this.

I'd hazard a guess that my mortgage is a lot smaller than yours, that my car and holidays cost less. Of course many people have a lot of debt, many have been supported by parents.

My point is people I know are doing all this but their houses aren’t worth £650k the here worth £1.1 million and they’re not driving a Citroen they’re driving a Volvo xc90 and their kids aren’t going to state school but going to private.

btw Dubai costing £1k (£500 flight and £500 hotel) for a few days so not exactly loads and Rome is £750 each. Main holiday will be Eurocamp so that’s about £2k and then we go up to the north west to see my family but when we do we stay in an Airbnb as my parents now late 70’s and we can’t all descend on mass to their house.

money breaks up about a month
£2k mortgage
£1.3k childcare ish
£800 food
£550 bills (council, power, water, broadband, home insurance)
£300 commuting
£650 other stuff I.e clothes, Toilitrees, birthday party presents, eating out, swimming, days out
£300 car (we did own our car but 4th MOT and service cost a lot and it’s depreciating about £200 a month anyway so seems right time to change)
£200 unexpected I.e car tax, dentist, hair cuts, old cat stuff
£90 car insurance (my previous car was stolen off my drive when they broke in for the keys so slightly inflated)
£80 pay for my mum and dads broadband, and mobile phone contracts
£100 piano lessons
£35 swimming lesson
£50 pet insurance

That leaves us with about £545 at the end of the month so that goes on emergency savings that go towards things like MOT, car service, replacing freezer that has just broken etc and holidays.

Ta da £7k

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.

But you bought a house late 20s. So where is that house? Where’s that deposit. How much is that worth and your LTV.

You are going seriously wrong here somewhere OP.

Our house value is about half a million, we are on rung two c. 8 years from first time buying. We have now 40% equity and on average have had a combined income of c. 50k.

Do you have a huge savings wad?