High earners - how do you spend your salary?

[Citygirly]

DH and I earn just under £140k combined.

We do maximum pension payments (his is 9% as NHS) and we also give about 10% a month to charity.

Other than that, we plan to start overpaying the mortgage. We invest £1k a month (so £500 each) and save £1k for holidays. We of course do general/specific savings but then have a good chunk left over for disposable income.

AIBU to ask other high earning households how they tend to allocate their money? Just want to see if we could be using it better or this is about right for comparables.

Work out

1. What are the things that genuinely improve your life, e.g. cleaner/gardener/better commute etc. and spend on those so you get to enjoy family time, hobbies etc.


2. What are the things you personally really love and can afford to treat yourself to, e.g. art, holidays, horses etc.


3. How much you can manage to save/invest/put in pension fund.

Budget for those. Don’t waste money on things that aren’t important to you.

Great fun, but they don't run so fast now they are actually starving, unfortunately.

@Bex000

Thanks so much for your helpful post.

We live away from London even though I work there so we can be close to both sides for help with childcare. Both grandparents have agreed to do one day a week each and are happy to come to our house on their day. I would ideally go down to 4 days so then nursery only needed for 2 days. DH also happy to drop a day if he needs to but hope that's not necessary.

This is my philosophy with fashion now. I would really like to spend responsibly on sustainable fashion and pieces that will last.

We are investing for next house now and will put amount up soon and keep putting up as pay rises allow. We need to build a decent deposit as don't have family help to fall back on so even though we can borrow quite a bit, we need to ensure we have that capital to put forward.

I would like to start buying luxury items as have not yet but have my eye on a few.

I have a reasonable car (second hand) and DH's is about 10 years old. We wouldn't buy new cars for the reasons you've stated.

Thanks again!

We are getting a cleaner within the next couple of months as we genuinely don't have time to clean.

We are going to get some swimming and tennis lessons to help us improve which will be fun and I also do yoga. Spending on these kinds of things is important to us as enjoyable but also good to keep active!

Yes, we do love holidays and think that they are beneficial in many ways!

we bought a small apartment in Bulgaria with the money we had saved as an investment (so its mortgage free (was 25K - amazing) same for the Spain house (95K). both countries are really good value at the moment. Look at coastal areas though if you want to rent it out. I also pay max extra contribution to pension. but i want to retire earlier hence the extra houses for rental income.

yes - I agree - a cleaner is fab and I have an expensive sport membership so I can swim daily in warm water and do yoga for free.

I really enjoyed the tips around tax, pension and salary sacrifice so would to thank those posters. Appreciate not everyone has these options nor spare cash to action this though truly hope they can one day soon.

Mortgage, bills, childcare and I’m still skint we are on a bit less than you but our childcare is crippling !

Then we can all pay less tax together … wonder how society will look in that event 🙄

Yes, beginning to think this should have been in Money. Earning your own money is overrated. Right.

Aah, lovely. Second home owners and private landlords have completely fucked the UK's housing market and are on to other countries now.

Yep. Not unique to rich folk...

@User48751490 we aren't rich. We don't have lots of assets and/or cash in the bank. We have only started earning this amount recently and that is the reason I am seeking advice. We don't come from money and are trying to manage the money we have started to make in our careers well.

And there's currently people in Davos who are millionaires demanding to be taxed more! Some people who are wealthy can see the inequality right now and want the tax system overhauled. Rightly so, as it's not working for the many.

High earners in the UK pay a disproportionate share of tax (30% of income tax is paid by the top 1% of earners). Many pay their taxes willingly because they recognise the importance of redistribution. You should not demonise them for trying to maximise the tax efficiency of their savings strategy. It is just sound money management and a perfectly reasonable thing to do. You would do the same in their position.

High earners in the UK pay a disproportionate share of tax (30% of income tax is paid by the top 1% of earners).

This much quoted stat only tells part of the picture.

"Most of the revenue from the top one per cent comes from a cohort of high-earning employees, who pay the often-quoted top rate of 45 per cent income tax plus two per cent national insurance contributions, with minimal deductions or reliefs. But a substantial minority pay much lower rates, especially taking into account capital gains, which offer an alternative way of taking rewards, mainly for the richest."

"Using anonymised data from personal tax returns, we show that in 2015-16 the average rate of tax paid by people who received one million pounds in taxable income and gains was just 35 per cent: the same as someone earning £100,000. But one in four of these paid 45 per cent – close to the top rate – whilst another quarter paid less than 30 per cent overall. One in ten paid just 11 per cent—the same as someone earning £15,000. The rich, it seems, are not all in it together."

You have no idea what i would do “in their position”

This is amazing 🤣

Do you pay more tax than you are required to, or just think that others should?

Getting upset that people invest in pensions or ISAs is quite some level of bitterness.

It was more directed to the, sorry to use the the term but tone deafness, ludicrous statement hopefully everybody will soon be able to avoid paying tax ….. we would all be fucked 🤣
In 2022 most people won’t be able to afford tax avoidance, it’s just for the lucky few.

AirBnB has a lot to answer for too! Using properties that could be real homes for holidaymakers seems very unethical to me.

It really isn’t. Lower earners still get to avoid tax, it’s just that the government does it for you.

There’s the tax-free allowance on income, reduced rates above the allowance, and an automated calculation at-source for pensions allowance.

Making use of these and complaining that higher earners use their allowances too is a bit inconsistent.

High earners in the UK pay a disproportionate share of tax

This is good. Means it's a progressive tax.

However, that's not the whole story is it? Income is a tiny part of wealth. We need to be taxing assets and capital before we have anything like a fair taxation system.

Precisely my earlier point …. Only fools and horses work

Not really. The bottom three quintiles of households in the UK contribute nothing at all, net. The second top quintile pause around £4,000 per year, and the top quintile pays everything else.

The UK taxes lower and middle-earners much less than our neighbours do.

I’d prefer that you started paying your fair share before demanding yet more from those already subsidising you so heavily.