to have assumed that a 100k salary in London would mean we would be more comfortable than we are?

[Baydreams]

I've been prompted to post this after reading the post about high earners and the two schools of thought that 100k either "isn't that much when you live in London" or "It's a lot compared to the average national salary". That post is here: www.mumsnet.com/Talk/am_i_being_unreasonable/3561649-To-ask-those-who-have-high-earning-partners?

So, the backstory is that we started a family unexpectedly in our early twenties and abruptly adjusted to a household income of £26k, living in London. We stuck to a grocery bill of £40 per week for a family of three, and never spent a penny on small luxuries like coffees, clothes, haircuts, etc. Even so, our household income wasn't enough to cover our mortgage (£800 per month and cheaper than renting), and all the usual bills and outgoings. We slowly sunk into debt just to cover a pretty frugal standard of living. After 5 years, this debt was at £25, so essentially we needed to earn at least 30k to even out our costs.

During the last year of this, my partner landed a higher paying job, and our area of London had had a bit of a boom, meaning we could afford to move our family out of our flat to a 3 bed terrace house in the same area, taking some of the equity to zero our debt.

Over the next years, our household income grew to around £100k, give or take. (My partner has a commission based job so we never quite know what the exact figure is going to be, but it's usually just over or just under 100k).

We live in one of the last remaining affordable areas of London. Our house is valued at £450k. Mortgage repayment is approx £1300 per month. No other huge costs apart from running one family car. We have three children. On a household wage of approx £100k, we can now comfortably pay our mortgage, and live a much happier day to day lifestyle in that I don't feel guilty any more about booking in a haircut or buying a coffee.

We are so relieved to be out of the hole we were in financially, and I don't see £100k in our area of London as a struggle at all - there are many people earning less where we live.

But, I will confess to assuming that it would mean we could afford more than we actually can in reality. For instance, we have found that we aren't able to accrue any meaningful savings - maybe £150 a month which tends to get eaten up very quickly as an 'emergency costs' fund. And holidays abroad are beyond us. We tend to be able to save for one once every three years and the other years we do UK camping holidays.

Previously to earning £100k a year, I did assume that holidays and savings wouldn't be a problem. How do other people with similar earnings and outgoings make it work in terms of saving for luxuries like holidays etc? Do you find you can comfortably afford to save AND go on holiday? Do you substitute one for the other? Do you find it easy enough to live on 100k or do you find it a balancing act to cover everything you would like from your lifestyle?

[bbcessex]

If you can, OP, concentrate on over-paying your mortgage.

I wish we’d done that when our kids were small.

When you have good earning power it’s really easy to fall into the spending trap - especially lots of regular meals out, coffees, nails, cheapish clothes but often
I can save £1000+ per month when I’m conscious of what I spend. Now I’m 50, we are over-paying mortgage & ramping up pension.

If your DH isn’t claiming his expenses, he’s not earning his full whack. Claiming my expenses is a job I HATE (even though it’s actually easy). I always put if off until last minute, and if I don’t claim within 60 days then I can’t. I used to let lots slip until I got my act sorted.

Your DH sounds lax with cash - make sorting it a joint effort.

[LBOCS2]

DH and I have a similar income to you and live in outer London. We don't feel skint, but we do notice when the car fails its MOT, IYSWIM.

One thing that has really helped us get a handle on our spending is to both budget using YNAB, but also allocate personal spends. So instead of having an account that you can dip into on an ad hoc basis, each of you should have a fritter account. You get a set amount of money (both of you, same amount) in this account at the beginning of the month and it's your play money. Combine this with a monzo account and it's very easy to see where your discretionary spending is going. And where you need to cut back, on a month-by-month basis.

[LBOCS2]

Oh, and also - if you have 3 children, doing anything is expensive. Even if it's something cheap, you multiply it by five and then it's £100. Each and every time - you don't have to do much as a family to get through a lot of disposable income.

[Langrish]

No, YANBU. People who don’t earn as much as you just see £100k, lots will be completely unaware of how much tax you pay and what your net income is.

[amber90]

Sorry if I find it difficult to muster sympathy for someone on 100k salary. Pfft

[Stormy76]

You probably need to take a hard look at your spending, if you really want to save money you can do it but it will mean cutting back on food bills, hair cuts etc

[Iggly]

£100k puts you in the top 10%

Why do people insist on ignoring this fact?

Dh and I had a joint income of about £150k when we lived in London. We were well aware that we earned shit loads but we also wasted a hell of a lot of money on frivolous spending.

Now we are on about £80k and have to tighten our belts but we are still comfortable!! It’s easy to fall into the trap of thinking you should have x/y/z now because of social media etc.

[lisasimpsonssaxophone]

People who don’t earn as much as you just see £100k, lots will be completely unaware of how much tax you pay and what your net income is.

UGH. I hate it when people say this. Everyone pays tax! No one thinks that someone earning 100k is taking home 100k to burn. But if you earn 100k and I earn 50k then you earn far more than me and trying to pretend you don’t is ridiculous.

[mirime]

"It's a myth that earning more gives you more - people are too quick to forget all their tax credit, child benefits and so on."

Our combined take home pay is about 2,350 per month. Pretty sure if it was upped to around 5,500 we'd be better off despite losing the 86/mth CB.

It's a bit of a myth that everyone gets tax credits...

[Baydreams]

@bbcessex we do overpay the mortgage, and have it on a 20 year repayment. So that’s one good thing we’ve been doing.

[bbcessex]

Excellent - good idea.. tell your DH that every expense he doesn’t submit eats into your mortgage overpayment.

Also ensure your DH puts a significant whack into the pension pot - as a higher rate tax payer it’s foolish not to.

[ChiaraRimini]

DH travelling for work could be a real hole in your spending if a. He is not claiming for everything. B. He is spending on entertainment that's not claimable while he's away. C he is late in putting claims in so the company always owe you money.
I had a similar problem when XH was working away and running up more than £1000 in claimable expenses a month, and also eating out/going out drinking every night and not claiming for that, as he was working in an environment which expected it. It made a huge hole in his take-home pay.

[Baydreams]

@nacreous thanks, that’s really useful advice about how to manage a large amount of expenses

AMEX is our main credit card but its not accepted in many of the (3rd world) countries he travels to. Hence needing to use his personal debit cards to use for expenses in those situations. I would suggest him setting up a separate MasterCard just for the expenses, but honestly can’t see him remembering to have it loaded with enough money. He’s too scatterbrained for that much organisation and rather set in his habit of juggling expenses on 3 different cards. I asked him today if he was happy with his system and if he thought it worked enough for him to keep track of everything, and he said yes 🤷🏻‍♀️

[Baydreams]

@chiararimini Yep, on an average month we have around £1500 owing to us in expenses. It’s a rolling cycle that often means we are in the red at the end of the month.

[Ezio999]

Whinging that your salary is only two thirds of the national average. Talk about it entitled.

[FiddlesticksAkimbo]

I remember reading that, outside the extremes of the bell curve, it is pretty much a universal constant that if you ask anyone how much they would need to feel truly financially comfortable they will name an income 30% higher than their own.

This is quite useful to bear in mind. If you have £100k coming in there are people on £75k who thinks that sounds about perfect. You'd ideally want £130k. But the people currently on £130k are struggling, and really need £170k to be OK.

I think the lesson is that most of us spend up to our income level, and then want a bit more. If you just adjusted to a £75k lifestyle you'd be much happier.

[Babuchak]

Whinging that your salary is only two thirds of the national average. Talk about it entitled.

there's always one.

[StormBringers]

We have an income of 70k, and will pay more tax as it’s a single earner. We live in a similar sounding area of London. We run a car, have three kids and I wouldn’t say we are struggling. I’m mindful of what we spend, but we can generally eat as we wish and go out.

[leonasa]

Blimey some PPs! OP hasn't asked for sympathy nor is "whinging" about her income level. Some people really are just so overcome by envy of the other that they have to be defensive and nasty (and I say that as someone also struggling financially on a fraction of that salary and about to become a single mum).

@Historydweeb I had a similar issue, employers can be terrible about this, you need to ring up HMRC and they'll update your tax code and your rebate will usually come to you pretty quickly through your PAYE. Also agree it's worth speaking to Citizen's Advice to see if there's anything else you should be receiving.

[lisasimpsonssaxophone]

That’s so interesting Fiddlesticks and I think it’s definitely true! I’ve always felt like I needed just a little bit more to be truly comfortable.

It’s a cliche but I once heard something like ‘earn £1, spend 99p = happiness, earn £1, spend £1.01 = misery’. I got lucky and walked straight into a well-paying job after uni, and ended up in a lot of debt because I always thought it was no big deal to just stick stuff on my credit card. It was the source of so much stress. Now I’m earning much less but I’m so much more relaxed because I just don’t touch my overdraft or credit cards and know that I’m only spending what I can afford.

The first step is being honest with yourself about what you’re spending and what you can afford. You’re already making great strides there OP which is great

[ChiaraRimini]

OP is there anyway he can reduce the burden of expenses eg get the company to book tickets in advance, give him a company credit card or cash advance.
You are paying for £1500 debt for the company on an ongoing basis. That's a lot of money. And it makes household budgeting a nightmare as you have found out.

[JaneEyreAgain]

OP, for what it's worth, DH and I hit a hole in the road a few years ago where we realised we were spending more than we earned. It was a huge shock and despite being highly financially literate, we had let things get out of our control and failed to keep track of changes to our financial situation. We had to sit down and analyse our ins and outs and deal with the harsh reality that we were spending more than we earned, or actually we were saving more than we could afford to save and had underestimated the time over which we could afford to pay off our mortgage. In any case, we did have to look at everything we spent, prioritise what we spend our money on and make choices, which were difficult.

[OccasionallyIncomplet]

It because you are talking about 100k earned by one person. That means you are actually taking home closer to £68k before National insurance, pensions etc. If it was spilt over both of you earning £50k each - you would be looking at closer to £80k.

(rough figures)

[Ivegotthree]

YANBU

£100k is not a lot in London by any means.

[Baydreams]

@occasionallyincomplet You are right. just did some figures to check this for myself. DH on 90k and me on 10k = 70k take home pay. VS two salaries of 49k = £72k take home pay, plus the extra money from qualifying for child benefit, and 30 free childcare hours instead of 15. For our family, that would equate to an additional 8k per year, taking the total to £80k.