..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?

Some if it's relative. If you live in Esher on £200k with DC at private school, you won't feel that we'll off. If you lived in Basingstoke you may feel better off.

There's also the fact that money makes money. Young professional couple in their early 30s each of whom may have had £100k deposit given to them for a flat and their uni fees paid off will be combining a lot more on marriage than the couple renting. Add in an inheritance from grandparents because their parents didn't need it and their lives are even easier before they are 40, often if they are compatible, without the marriage breaking pressures other couples face.

At least one really focuses on career and by 40 is very, very successful yet most things are paid for and accounted for. One has the luxury of being at home more with DC despite previously high flying career.

It keeps going providing they are both grounded and follow the Micawber principle.

£5.5k take home pay might break down as:

• £500 pension contributions
• £1,800 mortgage on a modest 3 bed terrace in Zone 3
• £400 bills, including cleaner 3 hours/week
• £500 grocery shopping, including pet food and household stuff
• £1,300 nursery fees

Leaves £1,000 a month for savings, clothes, discretionary spending, the occasional babysitter and maintaining a 10 year old small car. It’s comfortable, but there’s nothing lavish about it.

Two people earning £35k each would bring home the same amount, and no assumptions would be made about eating steak or bathing in gold etc.

rich to me is assets & in most cases not living off a pay slip

I don’t really think people earning 100k are a problem. Our household income is 6 figures and we are comfortable but my DP still waits for things to be on sale etc. We don’t have kids yet and I can imagine this will put a strain on things and is the reason I’m putting it off. Anyone going into a professional sales job has the absolute chance to earn 6 figures in commission and you don’t need a fancy degree to get those jobs.

If you want to focus your attention to unfair wealth, look at the remaining aristocracy and the CEOs who are earning millions in salary while their workers are on minimum wage. We need a wealth tax and we need an inheritance tax at the higher levels that gets around trusts etc to break the aristocracy for good (and to raise the cap because 50% inheritance tax over 400k or whatever it is is completely ridiculous in my mind - that’s most people’s family home in London).

I earn in the mid 80s and it's more than enough for me. I salary sacrifice 20% into my pension, which gives me about £4k per month after tax. My mortgage is £1k per month for a three bed semi in a nice part of a northern city. Another chunk into post tax savings (ISA etc). My car is worth about £10k. I spend well on things that are worth it to me (hobbies etc) but still look for bargains/deals.

I'm sure I could spend it fairly easily if I got a bit less tight, but in my head I'm still the student who had 5 years at uni and a first job paying £15k so I sometimes struggle to give myself permission to spend. The good thing about that is that my retirement savings are healthy and my house is almost paid off so I don't worry about the future.

Got to love a MN thread full of people earning twice, three times, ten times the average UK wage, tying themselves in knots about how it really doesn't go far, what with 5-10k holidays, private school fees, 1k food bills and £10 a week pocket money for each child.

No wonder socialism doesn't stand a chance in this country.

@CSJobseeker in the UK the marginal effective rate of tax on higher earners can be 60%. You lose the personal allowance. The higher rate boundary also falls in line with the personal allowance, also don't forget NIC.

[quote TuftyMarmoset]@Itsnotgreatlike there’s a minimum salary at which an expensive commute becomes worth it though. When I was looking for a job I looked in London and locally, and was willing to accept a lower paid job locally to the value of the money and time I wouldn’t have to spend commuting.[/quote]
That's true to an extent but that also depends on where you live and the availability of jobs locally. If there are none locally then you'll have to commute whether it's realistically worth it or not. The alternative is unemployment.

The major difference is not about how much you can spend its about how much you can save. The higher income allows us to save for our future and our dc future and that is the biggest luxury as far as I can see. I know we are immensely privileged to have anything left at the end of the month to allow us to do this.

It sort of boggles my mind that some posters are saying you need 200k to comfortably support a family of 4 in London - I mean what proportion of people really earn that? Not many key workers, that's for sure.

@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.

Exactly

Can we stop with the “£100k is not rich in London” rubbish?

It’s more than double the average London wage! I live in London. I grew up here. It’s a massive amount of money.

Source: commonslibrary.parliament.uk/research-briefings/cbp-8456/

Low six figures net here. Tbh we saved 50% with a pretty comfy life until we had DD. So we got a part time cleaner in, had to get a car i still need to use a different driver whos happy to fit DD carseat in his cab so but expensive, buy expensive food for DD (imported, we always used to eat mainly locally produced stuff)nursery and so on and so. We don’t do designer gear here and tbh most shopping is centred around DD’s needs. We still save a reasonable amount but nowhere near what we used to. I think you can be comfortable but on low sixes your life is going to look (and I mean look not is) very similar to anyone elses tbh, few more options sure but not vastly different. I think inherited wealth makes a massive difference (we don’t have any) and we are early/mid 40’s and this is pretty recent so not looking at some sort of luxe lifestyle. Everything where I am is more expensive, books etc have something like a 50% markup.

Tbh i don’t want much more, we are comfortable, happy, DH isn’t killing himself at work and is a very present and hands on father. I do think after low 6 figures companies really want their pound of flesh tbh and that means often more stuff has to be outsourced to keep a family functioning. Or having to spend a massive amount on commuting or living in area close to work etc. I can see how it goes really easily even wothout ponies and private schools.

I'm a higher earner too, live in London so everything is expensive. Travel card for the day to work and back is £17 for one day.

Other than mortgage and bills which is expensive, I spend a lot on childcare, tutors etc. Afterschool care, tutor, cleaner is around 360 a week, so at least £1500 a month. Then add activities, food, socialising etc. It's comfortable but not extravagant.

[quote Peaseblossum22]@CSJobseeker in the UK the marginal effective rate of tax on higher earners can be 60%. You lose the personal allowance. The higher rate boundary also falls in line with the personal allowance, also don't forget NIC.[/quote]
That marginal rate is specific to the 100k cutover point and most people reaching it avoid it by bunging more into pensions or similar until its sufficiently above the 100k for it not to be a high marginal rate any more.

However you cut it, whichever part of the country, we are still vastly better off that 99% of workers in the country and should remember that when carping about tax "burdens".

"burdened" is trying to keep a family together on minimum wage on contracts which don't guarantee regular hours in a housing system which affords no real protection to tenants.

Stress is losing your temper with a child who has gone through their school shoes by not changing into trainers for football because you know you don't have the money to replace them, not waiting for the outcome of that multi million pound proposal which will bring a big bonus.

@RosesAndHellebores makes a good point re inherited wealth.

It depends, every high earning household will be different, just as most middle income households are. We have a gross of around £350k pa, if we just took everything out as normal that would result in a tax bill of around £145k pa. As it is we pay 40% of our gross income into our pensions, which reduces our tax bill. That means we have a net of around £9,200 pcm.

Our mortgage it £1,800 pcm as a base payment, but we overpay by the maximum so that rises to around £2,200 pcm, council tax £300, gas and electric £120, water £45, Broadband £42, mobile phones £26 x2, Netflix £14 that comes to £2,763. We have Prime but pay annually and Spotify included in mobile contracts, no Sky and get Disney+ for free though work. Petrol might be around £120 pcm, car insurance and tax is paid in the month it is due. Food is £600-900 a month and varies from month to month. Depending on the month we will then put £3-4,000 into savings and the rest is spending money, days out, holidays etc.

From our lifestyle you would not know we are high earners though, we have both hit our stride career wise over the last five years and our incomes rose dramatically, but have kept our expenditure very similar, we now just put a lot into savings, pensions and overpay our mortgage.

@ShrikeAttack I was annoyed with your posts until you said that you wouldn't claim to work harder than anyone. I'm so glad you said that.

I could work every hour of every day and I would still be on my measly wage with no hope of promotion. Bad childhood and suspected ADHD mean I didn't achieve even though I am intelligent enough, I'm stuck in my job even though I do a bloody good job of it. I can't schmooze and will never talk my way into anything.

Opportunities, support, and luck have more to do with it than working "hard".

DH are on high incomes.

Nothing is gold plated in our house!!

We live in the south east. A modest 3 bedroom semi will cost you £650k. Most people we know have moved from london & had a bit of housing equity so had deposits of 100-150k, but that still leaves you needing a mortgage of 500k.

So of 100k each p.a:
£34k goes in tax and national insurance.
£12k goes on the mortgage.
£10k goes on childcare (2 kids - remember because we are high earners, we get 15 hours not 30).
£6k goes on extra pension contributions. We are in the private sector, so our pensions provided by employer are poor, without topping them up we would never be able to afford to retire living where we are.
£3k goes on transport to work
£12k goes into the joint account and pays for food, utilities, insurances, TV license etc.

So that's £77k accounted for.

The remaining £23k goes on:

• holidays (probably about 3-4k)
• christmas and birthdays (2k)
• swimming and music lessons/hobbies (2k)
• gym membership: 1k

We save a few grand a year and don't have to worry about if the boiler breaks etc, and we can afford reasonable clothes although we arent in to fancy brands).

We donate a chunk to the school and do some matched giving through work.

We drive a 5 year old very ordinary brand car (no range rovers here). Our eldest attends the state primary school nearby. We could stretch to private but we dont think it's worth it and our budget would be a lot tighter.

@MyAnacondaMight

£5.5k take home pay might break down as:

• £500 pension contributions
• £1,800 mortgage on a modest 3 bed terrace in Zone 3
• £400 bills, including cleaner 3 hours/week
• £500 grocery shopping, including pet food and household stuff
• £1,300 nursery fees

Leaves £1,000 a month for savings, clothes, discretionary spending, the occasional babysitter and maintaining a 10 year old small car. It’s comfortable, but there’s nothing lavish about it.

Two people earning £35k each would bring home the same amount, and no assumptions would be made about eating steak or bathing in gold etc.

Exactly… and tax reduces it by so much. I’ve told DP that there’s no point in one of us ‘sacrificing’ our career so that the other can earn 100K. We’re better off going part-time and earning 30K each.

Of course we’re lucky to have the option but because of the 62% tax rate cliff a lot of professionals, like specialist GP’s deliberately work less.

@C8H10N4O2 I am not carping , if you search my posting history you will see that I am actually an advocate of paying more tax and personally would happily pay more. But the OP asked where the money went and it is true that a big proportion does go on tax,

@Atla Key workers might be young (no dependents) and rent a room for which you can do so on 25k. Which make up a large percentage of young working people in London. a lot of people in London are also from ethnic minorities (only 40% white British in London) where its common for grandparents to live really close by or even with you so the childcare expenses is not needed. I mean, my MIL lives really close by in north London so if she looks after my child, I wouldn't need to earn that extra 2k per month but there is no guarantee she would so I am still budgeting it in. There is also council housing or housing benefit which helps pay the rent of 25% of london families. Probably a lot of key workers fall into that category. I am talking about a couple who comfortably earn above any benefits threshold but wanted to pay a mortgage in zone 3 and also childcare fees (cos both parents working to pay the mortgage).

Middle class white people tend to move out of London when they have kids . They also have children later so if they earn well in their 20s and early 30s and buy their house early, this may mean they pay a lot of the mortgage off during the childfree years and have a smaller mortgage so the mortgage expenses may not be 2k or 3k as I estimated for a 3 bed terrace. gifted deposits also help. I am just estimating based on 25% deposit on a 800k house/mortgage of 600k which is 2558. Actually a house in my area is more expensive, its a million, but there are cheaper houses in outer zones that are around 800k. You could possibly get a house for 700k too but would probably pay more in commute fares

@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.

5.5K a month is a lot of fucking money!

I'm with you OP, I couldn't imagine what it's like to be on something so huge as 100K salary. To me, anything 50K+ is eye watering. Definitely a completely different world to me too

of course we’re lucky to have the option but because of the 62% tax rate cliff a lot of professionals, like specialist GP’s deliberately work less.

I work 4/5 because I'm around that threshold. If I worked 5/5, after paying the tax and childcare & travel for that day, it brings me almost nothing.

[quote Dobbyafreeelf]@ShrikeAttack ffs!!! Yes that is rich!!! I don't bloody earn that in 2 years!!! Ffs!!! Nobody deserves that sort of obscene amount of money! [/quote]
Now now, we can't go down the 'deserve' route. Who would get to decide?