..to struggle to comprehend huge salaries?

[missbunnyrabbit]

I was reading the thread about how much people earn having been to grammar/private schools and I just cannot get my head around how much lots of people earn. My head just cannot imagine such huge salaries. People earning over 100k, what on earth do they even do with that money? Do they buy everything gold-plated? That's a joke BUT I have no idea what anyone does with that sort of money or what it could be needed for. This isn't a bashing thread or anything like that. I'm just a bit stunned.

Does anyone else's brain struggle to imagine such huge amounts of money?

Pay larger mortgages, go on more expensive holidays and the potential huge one - pay school fees

I understand what you mean OP, it can feel like a different world. I know we all cut our cloth, live to means, and so on. But I’m not sure what I would do with all that money. I’m guessing I’d have a pension, as I don’t have a single penny in a pension at the moment. Maybe holidays? Maybe the time to go on them, which I is what I lack at the moment.

This is all from the perspective of having tripled my take home pay since I started full time work 19 years ago and having had various leaves for DC along the way. But still on less than 30k - shrug

I'm one of those people on over 100K, but I'm a single mum with no support from ex-husband and my daughter is at private school and we own a pony. So I'm doing my shopping at Aldi and always worry about how I'm going to pay the next school and livery yard fees

You do realise that the government takes 40% of everything you earn over £50k in income tax, and that a gross salary of £100k equates to take-home pay of around £5500 per month, don’t you?

That’s a decent salary, particularly if your other half also works and you don’t live in London, but it’s by no means rich.

I think it’s all relative - and as your income goes up your costs and expectations go up. Plus it depends on where you live £100k in London won’t go as far as it would in other parts of the country.

I don’t earn that much but I’m not so far away from it that it seems like an unimaginable sum.

On the other hand I can’t get my head around people who earn millions each year (or minute if you’re Jeff Bezos)

I don’t earn that much but I have colleagues who do. One colleague for example - his wife doesn’t work. Both kids at private school. 4 bed detached house in nice area. So mortgage is probably about 15k per year, school fees about 25k. They have nice holidays , and they each have a nice car which they replace every couple of years. The kids aren’t spoilt when it comes to presents, but they certainly don’t go without.

I think it would be pretty easy to get through 100k in a year. Remember that a big chunk of it will also go to the inland revenue.

It’s very easy, you get a way bigger mortgage and a house that burns through cash because it’s larger. Bigger gardens mean probably paying for someone to come and deal with it every so often, a bigger house is harder to clean solo.

You cut your cloth accordingly.

You pay 40% tax on that amount so they won’t get to keep as much as what it seems.

My DH is on 50K which is a descent salary, particularly in the north. If we had another 1.5-2k a month, I’d definitely send kids to private school.

Our income is over 100k. We spend a lot of it on our children- school fees, tutors, multiple activities.
Also have a big house- mortgage isn’t that big, but the costs of running a big old house are much more than when we had a new build.

@Libertaire

You do realise that the government takes 40% of everything you earn over £50k in income tax, and that a gross salary of £100k equates to take-home pay of around £5500 per month, don’t you?

That’s a decent salary, particularly if your other half also works and you don’t live in London, but it’s by no means rich.

£5500 pcm is rich!

I agree with pp. As your income goes up your outgoings and expectations go up. Things that were inconceivable to me years ago I now wouldn’t think twice about.

@Libertaire

You do realise that the government takes 40% of everything you earn over £50k in income tax, and that a gross salary of £100k equates to take-home pay of around £5500 per month, don’t you?

That’s a decent salary, particularly if your other half also works and you don’t live in London, but it’s by no means rich.

5500 a month actually makes me want to weep. That is so much money. I can't imagine earning that much. I suppose the more you earn, the more your lifestyle inflates and you just buy better of everything. But that feels so materialistic, so unnecessary, when you can easily live off much much less. Argh I know I sound judging, and I don't really mean to be, I just can't understand it. It's a whole different world, a whole different existence.

My head actually hurts.

We have a LOT coming in in salary and accordingly pay a massive amount of tax. No flash lifestyle here but we have freedom to travel, eat decent
food, have kids do extra clubs etc.

Our mortgage, bills and
Essential-ish outgoings are £4.5k a month.

I remember thinking the same thing OP and yes it’s a pretty mind boggling amount.

But now I earn well over that tax free (DH earns more than me) and I don’t keep up with Joneses (nor buy anything gold plated! 🤣)

It’s true that lifestyle increases with salary, but in most cases (like mine), I haven’t changed fundamentally. I don’t buy designer, I don’t shop clothes shop except when needed, we don’t drive top of the line range rovers or whatever the current vehicle de jour is, our kids don’t get spoiled with playstations/xboxes and don’t have them.
We live in a tax free country but it also happens to be one of the most expensive countries in the world so we cut our cloth so we can save a lot.

Mortgage
Household bills (electricity bill is circa GBP300 pcm, water GBP 50, internet GBP150 etc etc)
FT Helper/cleaner
Life insurance (mandatory with mortgage)
Gas
Groceries

Everything else is gym or the kids extra curricular karate which amounts to £200 pcm for unlimited classes for them, they don’t do any other activities.

I’d rather have a lot of money invested and in savings - we live o/s so far away from family and I want to be able to fly back to UK whenever I want to spend time with family.

Money has given me the privilege of time for which I’m eternally grateful.

We're in that category; as others have said, almost half goes in tax. We have a big house and garden with a gardener and cleaner and maintenance and upkeep costs quite a lot per year. We have two kids at private school and spend quite a lot on holidays. Our cars are quite expensive but we buy second hand and keep them for 8-10 years.

I think inevitably your lifestyle ends up matching your salary to some extent although we're fortunate in being able to save and invest. When I worked in investment banking, some of my colleagues earned £2 million plus annual bonuses and spent their money on big houses, second homes and squirrelled the rest away for a rainy day.

Long holidays, less work, more on food, more on parties and events, more on properties

You cut your cloth accordingly.

Yes we could have bought a cheaper house, but we could afford this one & also means that someone else can afford the cheaper hypothetical house we could have bought instead.

We end up with between 3-4K leftover per month but we haven’t reached an expensive part of our lives yet (1 DC at nursery). When we have multiple kids in childcare or in school, then we reassess again.

For us, our splurge is trips to Australia to see family most years. Plus the rest goes into our pension to allow us to retire early, or at least both go part-time early. I’m part-time now in my 30s, DH is aiming to go p-t in the next 3 years and we will both remain that way until retirement.

As for buying things gold plated, I still shop in places like the pound shop and like to buy clothes in the sales where possible. I also shop around for things like car and home insurance, utilities etc. My toiletries are whatever's on offer at Tesco or samples from hotels. I also buy stuff secondhand. I'd hate the thought of buying expensive handbags and things like that, but each to their own.

Same @jjj321. I love Vinted and buy 90% of my wardrobe from there. I operate a one in one out policy and use my balance from selling items to buy mine & DC’s clothes.

I’ll occasionally buy something new but good quality - I’ve just bought a cashmere jumper from COS for £130 but it’s to replace one that’s about 6 years old that’s seen better days.

There are lots of rich people on here with massive salaries who think they're "average", can all be a bit of a self fulfilling prophecy when they get together. I would guess big houses in expensive areas and school fees. Only 7% of people are privately educated, but there are a lot of private parents on here.

Almost half of mine goes on tax. Then there is £1k pm month mortgage and £4K pm on school fees. It soon goes.

Not in the UK, but DH and I make about £250k between us. A lot goes in tax, and childcare, various kinds of insurance (health, property, life, pet) and living in a flat in a bonkers expensive area so we don't have long commute because we already work a lot and I don't want to spend a minute more away from DS than I have to.

I wish I were out buying Birkin bags, but any designer swag I have is on consignment or from sample sales. Most of my clothes come from JCrew or similar. I still like a bit of Primark too .

We do have nice holidays though. Or did pre-Covid. We also eat out a lot in posh restaurants and buy the absolute best food to eat at home. We've also got a fridge of very nice wine and we get deliveries quarterly direct from our favorite vineyard in Napa.

My parents were always in a cash flow crisis. Everything I had in my childhood was a bit crap - always the cheap version, or the not as good version or the knockoff of what I actually wanted. I'm bright and was a scholarship kid in a private school, which gave me a glimpse into how the other half live and I wanted it that life so much. That probably makes me shallow on Mumsnet, but so be it.

Unless you're a diplomat, a huge chunk of very high salaries go into tax so that actual take-home pay is only half of what's on paper.

Expenditure simply scales upward, so a monthly mortgage payment might be several thousand and running costs of large properties are also higher. Most people will have a cleaner, housekeeper or nanny which takes a further few grand. Having an au-pair means paying a full time salary out of your salary so that's another expenditure.

Holidays are also a good way to spend money, especially as people in those jobs are typically cash rich but time poor. So once they do have a few days off they will go balls to wall spending money for leisure. Five figures is a minimum for everything including meals and shopping. There's a segment of 5* hotels that costs 1K per night for a regular room and 2-5K for suites. You can rack up costs very quickly that way.

Whatever is left can go into cars. At this level you will definitely need at least 2 cars (husband & wife) with each child getting one as soon as their pass their drivers license. Budget will be around 80K-100K for a family car (Range Rover, Audi A8, BMW X6, Tesla Model X etc) and 30-40K for the kids cars (mid-range Mercedes or BMW).

Ironically, the income disparity between the final 1% of earners is much higher than the 99% vs 1%. Most people assume the one percent all have the same lifestyle but it couldn't be any different. Those earning around 500K will probably have a lifestyle described above which is luxurious but not crazily extravagant. The typical "rich" life that people picture from movies is only attainable for the top 0.01% or 0.001%. This where you have private jets, supercars, yachts etc.

People also assume that all high-earning people have their money in tax havens or use other financial loopholes but this is not true 99% of the time. Only the mega rich 0.01% tend to do that. It's very difficult to escape Inland Revenue and often not even worth trying since transactions that can be fudged easily are usually too small to matter (a meal out, a phone bill, a laptop etc). Trying to hide 5-6 figures from the taxman is a massive risk and recent headlines prove that these schemes get exposed all the time. So the majority of high earners pay an eye watering amount of tax before they get to spend it.

"Money has given me the privilege of time for which I’m eternally grateful"

@Strokethefurrywall nailed it there. More eloquently than I ever could.