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?

HSBC does a good air miles card.

www.godsavethepoints.com/2018/07/15/best-uk-travel-credit-cards-2018/

Leaving aside everything else, why on earth are you so fixated on airmiles if you can't afford to go on holiday? The very first thing I'd do is make your husband use a dedicated credit card for expenses and make sure he claims every penny.

So, your monthly outgoings is actually closer to £4k than the £3K you thought they were. So, you've underestimated your monthly spending by £1K!

A gross joint household income of 88k/10k equates to approx £5.6K net which means you have a potential £1.6 - 2.6K to save/not to waste.

You know that you need to get a handle on your expenditure. Just think how much £1600 - £2600 pcm would overpay your mortgage by and allow you to have more disposable income in the near future.

How much is that per month after tax?

We're in a similar ballpark but know exactly what we are spending and why.

One thing that makes a huge difference to how rich you feel is what sort of lifestyle people around you have compared to you - if everyone at the school gate in your area is talking about their third holiday of the year, then you feel bad if your kids only get one. If the conversation around you is about bargains in Poundland and saving up for a day at Chessington, you feel rich in comparison if you're having a holiday. I'm very glad I don't live in SW areas where some family live and feel the pressure to keep up with the Joneses.

IME air miles aren't much use if you don't travel every couple weeks. A card that gives you 2% off shopping may be much more use. And a separate one for DHs travel expenses so he can easily keep them all separate (two, if necessary) from personal spend. A fun budget for each of you, and savings taken automatically each month.

Sometimes London is more expensive - when DH worked near Canary Wharf but too far to reach all the shops there, it was extra-high-priced Pret or something more expensive for lunch. I'm in a touristy area but there's sandwich shops that are much cheaper. Now he's got more choice he's saving £50 a month. But basically as long as we keep track of spending, we are well off (but if we didn't, we wouldnt be) - main realisation was that now the kids eat lots, a simple trip to Pizza Express isn't the £30 it used to be, but over £100! Even the vouchers only save about £3. Or a round of ice-creams is £15 from the van.

So now we hit the supermarket for icecream, and if we do go to PE, it's less often, and as a treat, not just an easy way to feed kids if we don't want to cook.

It could be worth increasing pension payments rather than overpaying the mortgage so much - a financial adviser might be a good use of money.

My salary is about 125k/year and pay £1,100/month on housing plus bills. Single parent, 1x DC.

It's a ridiculous amount of money, and it means I can either save very hard (up to 2k), easily cope with any financial dramas, or live very well and splurge. All while living day to day without counting pennies.

I do budget, but mainly on the fixed costs. Savings second priority, followed by leisure, followed by expendible.

Since earning around 50k about 15 years ago, I've never worried about money. I've put in the work, but I still feel privileged to not have to worry.

...and 30 free childcare hours instead of 15.

But you get 30 hours free childcare unless one person earns over 100k, so a couple on 90k/10k would still get them. I do think it's very unfair re child benefit though.

Regarding the air miles cards, they are a bit of a red herring. We put everything we bought on an air miles credit card for years and we got 2 return 4 hr flights (still had to pay booking and taxes etc). Now I have a cash back credit card and get £15 every month back. Doesn't seem like a lot but it adds up and is better than air miles that you never use.

We have a similar income to you and one thing I'd definitely caution against is using a credit card for everyday expenditure. We did, for the cashback, and when we stopped a few months ago we realised we'd been spending £500-750 more a month than we could afford - because of the way credit cards cut off mid month and effectively you only ever pay off half the months true balance. It took a good few months pay off the whole balance and adjust our budget accordingly.

We're splitting up now and I'm going to be adjusting to an income a quarter of what I've been used to...!

Definitely need a budget. I earn less than that but still comfy with similar mortgage and childcare etc.

I've been there. Like you, our earnings were relatively low for about 7 years and 3 kids during that time meant much higher expenses, so we had to keep a really close eye on every penny. Then we both got significant pay rises and we subconsciously took a break from budgeting. Had a fab 2 week holiday and treated ourselves to things like concerts that we hadn't been able to do for a while.

It took a while to realise that we were dipping into the savings so regularly that we didn't really have any. Had a big wake up call after about 18 months when I realised we didn't have enough money in the savings to buy a cheap car. That was 18 months ago, and things are looking much healthier now. We put 1000 pm into savings and can start making plans again. As long as they're within budget! I use ynab and love it.

I lived and worked in London for nine years, always had loads of money, I moved back to Scotland, better quality of life, still better off than most, own my own home outright and have no debt, I think it’s what you do with your cash and how you budget.

@alsohuman He likes the idea of potentially saving money with the companion vouchers and the air miles. But you are right, it is a red herring where our finances are concerned and we can never afford the trips we qualify for without overspending. We’ve had that convo many times, I’m working on getting him to ignore the lure of the ‘free’ flights.

@updownleftrightstart I haven’t had a conclusive answer from HMRC as to whether we will qualify for the 30 free hours. They’ve told me to check back in the term my child turns 3. It’s because our earnings fluctuate each year, on last year’s earnings we would qualify, but in the year before school when we’ll be using the free hours, it might be a different story. That one is not easy to work out, but i’d rather assume we won’t qualify than overestimate our finances further!

@badtigerkitty I think this is what has happened to us and I feel really stupid for not realising. I’m tinkering with YNAB, but finding it all quite hard to work out.

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

FFS, it's well over twice the average for London and the OPs mortgage isn't that big (well done for overpaying and taking the shorter term btw, and don't forget you consolidated previous debt into it - extra incentive to get rid of it faster) nor is their childcare, especially considering they have 3 DCs. Many London families will be paying £2k+ a month on nursery/a nanny.

Have you ever used these free flights OP? Could they actually save any money on the trips you are likely to do? I've never gone after air miles because I don't understand them and because we generally travel short haul from the north of England, there is very little choice in available flights anyway and as you have to pay the taxes, I can see a situation where we would use up a load of air miles to get some inconvenient flights and not actually save any money as it's just discounting a more expensive flight down to a similar price of the budget airlines we normally travel on IYSWIM.

Such as the time we went to Lanzarote for £30 - £26 of this is taxes, that we would have had to pay even if we had the necessary thousands of air miles, which we'd spent tens/hundreds of thousands of pounds to aquire. I prefer to keep things simple and use a cashback credit card that gives 0.5% on all spending.

YNAB is brilliant, really makes a difference and could particularly help when you have fluctuating income. It is a bit of a learning curve, though, so you need to watch all the support videos and maybe some of their online classes - when it 'clicks' it's great. I think you need more than the month's free trial to get the benefit - but if you email their support is great and they'll usually add another month on for free. There's a good subreddit full of YNAB experts if you are stuck.

Is YNAB very time consuming? It sounds you need to set all your categories eg mortgage, food, council tax etc and then ensure your spending sticks to the amounts in those categories?

And then if you want to buy something or spend money, identify a category to take it from? Sounds awfully fiddly?

I get it OP, but it’s so easy to get used to spending a little here and there, not keeping track of things, and spending for convenience, when you know you have a decent income.

Have a look at money saving expert. I started using a budget spreadsheet years ago and DH and I still use the same format for our budgeting. We sit down monthly and look over everything. When it comes to savings, you have to prioritise it even if it is a tiny amount. And keep that separate from your household emergency/expenses account. £100 a month into an account that is just for household insurance, boiler repair etc - it’s NOT savings, as you intend to spend it when the need arises. Personally I’ve always been a bit fly by the seat of my pants when it comes to money and I’m not temperamentally a saver, but I don’t like wasting it and you may find that’s what you’re doing - spending on things that don’t matter to you.

It is fatal to think that because you have a good income you don’t need to budget.

Barbara not time-consuming once you've set it up - there's a mobile app which is super-quick to add transactions, so if you spend £5 in Costa on coffee you can just tap it in and it takes the money from the category you allocated cash for coffee to. It learns as you go how you usually spend and where so if you type in M it will pop up with e.g. M&S and give you the most frequently used category e.g. lunch at work, or whatever.

What it does is really brilliantly break the cycle between bills, spending, and pay frequency. It gives you a really good clear sight that if you choose to spend £5 on coffee when you didn't allocate £5 to coffee, you're going to need to steal it from your holiday savings, or clothes, or the kids' activities, or whatever. It really shows you that you're prioritising the short-term coffee over the holiday you want, and then you can decide what to do with that information.

Once you've set it up well you only need to tinker with it once a month if you have a handle on your spending. But if you're not so on top of it you'll need to move money around more often until you get to that stage.

You say you do not spend much on clothes etc. But what you may think is not much might be quite a bit. For example I have an annual clothes budget of £300 a year for myself on clothes and shoes. Last year I managed to spend about £200 so I could spend more on growing dc. I am not suggesting you have a £300 a year budget but how much is not much?

Also I cant see if you have said your monthly grocery shop bill is, but you can probably reduce this.

I have no where near your income, granted I dont live in London. But I am only on just over 10% of yours.
I just feel perhaps you can make savings on food, clothing and some activities. To save for a holiday you would like.

We have a similar combined income and can afford a holiday a year. Have two cars now. Next year our childcare costs of 800 a month will go. Kids can do the club's they want, we can afford day trips and meals out. We pay a lot into pensions. But there is never loads left to save. We could cut back if we had too, but guess we just adjust to spend what we have. My first salary was 16k and I lived within my means then. Pre kids.
When childcare costs go we will improve the house and have nicer holidays. I know I should save really.

Its DH and the flights and expenses. That's got to be sorted. There's no way round it.

I think you need to "flatten" your expenses problem. If he only travels quarterly, then monthly put away money as his expenses float. Then you won't get the 1.5K surprises.

London is expensive. I got a quote for a job - tiling a floor 2m X 1m with big tiles - and got a quote of £600. My MIL had similar done and it was £250!

The tube is at least £10/day and my council tax is £250/month.

100K isn't on the breadline in London or even close, but extras such as skiing and non-package holidays abroad are out.

OP can you check/illustrate the expenses problem to your DH? You can usually download transactions from credit cards - with mine you can download a year's worth into excel, all categorised. You can then analyse those to your heart's content.

I would download a year's worth of transactions and split out the ones that were for his work and then compare these with the amount that he's been repaid to see if they are about the same. Obviously due to the time lag, they might not exactly match up, but if he's not getting back hundreds/thousands of pounds that is contributing towards the hole in your budget, then it should show up.

I make a point of doing my work expenses straight away after a trip, so it's literally a quick job. Otherwise you forget and it turns into a huge job to sort out all the receipts and remember the justifications, mileages etc (we have amounts we can claim for being away from the office for more than 5 or 10 hours or return after a certain time, so you have to say how long you were out).

Or if he's in a 'big job' does he have an assistant or admin support who can do it for him? We all have to do our own exps unless at director/head of department level and have a PA - at that level, the PAs do the expenses for them.

The tube is at least £10/day and my council tax is £250/month
This is not outrageous compared to elsewhere though? I live in a home counties town, its at least £24/day to commute in peak time and our council tax is similar. In fact transport is loads cheaper in London than elsewhere.