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.

@Robinni

No need to reflect, thanks for the advice though.

What a ridiculous thread this is.

Its obvious that the self-professed "high earner" OP on her £70k or whatever, could we'll find she has less disposable income if she's living in London, than someone on half of that living in a cheaper area in the North.

The real 'high earners' in the U.K. are not salaried people at all. They are risk-takers and entrepreneurs. They routinely make or lose many multiples of the OP's income on the City Index or as part of their investment portfolios on a daily basis. Yes, that may sound like a risky way to live and it is, but these people are the wealth-creators and provide hundreds (maybe even thousands) of jobs within the economy. They don't think in terms of "salary." And many if these people are immigrants by the way who came here from countries with no safety net and started from rock bottom. Not an Oxbridge grad or public school type among them, I can assure you of that. I'm talking about people who have created thousands of jobs and built up companies worth millions, even billions. Normal people.

Most people are interested in what other people choose to spend money on though so it is quite an interesting thread.

I'm not remotely interested in what other people choose to spend money on. I'm sure I can't be the only one.

And yet, here you are, on this thread.

@youdothemaths as a pp said, why are you on this thread then? The title is clear so you must be interested even if only slightly

@Citygirly
www.dailymail.co.uk/femail/article-10854049/High-earners-reveal-really-spend-money.html

A number will be drawn by this..

Armed guards
Barbed wire
Peasant poison

Finding this thread very useful - even if I understand it can be annoying to less fortunate readers.

In a similar situation as mentioned by others. My DW and I don’t come from very wealthy families, we earn much more than our friends, and we don’t really discuss how we spend our disposable income w our co-workers. So this thread is very informative.

Our joint income is over £600k and has been for a few years. This is really an insane amount of money to us as we don’t come from money, and as a result it doesn’t really feel quite real. Hence we sometimes feel we are quite (too much?) conservative with our spending.

Monthly’s: Mortgage payment (£6k), school fees (£3k), food, utilities, restaurant, social, subscriptions, maintenance, cars ownership etc… (£3k)… holidays (£2k) - the rest is mainly savings (£15k)

We save as much as possible as we want to be financially independent before 50y/o and our jobs are not 100% secure.

Because of how we were raised, we don’t splash on expensive clothes, watches and other external signs of wealth. I drive a 5y/o Volvo and my wife a 6y/o merc. I also own a cheap and rusted 1966 Land Rover :-)

Sometimes seeing people earning much less and seeming to spend way more on luxury holidays, new flashy cars etc… I am wondering whether we’re just too cheap and should spend more on things life has to offer before it’s too late (YOLO).
We like the fact that our kids aren’t spoilt though.

This is why I find this thread interesting.

I personallg save 24k a year + 13% into pension. We have a small mortgage. Fund school fees for 2 kids via bonuses (rest of it is saved - so add another 20k to savings in DH’s name) but have enough saved to cover them in full until 18 if ever needed.

Expenses are highish at the moment - 2k a mth. This will change massively from next month as we’re trying to cut down food expenses by only eating seasonal. It’s our biggest weakness as DS and DD love super expensive fruit and veg - eg we can go through £6 of blackberries and £7 of strawberries every 3 days and £20 of mangoes every week which is crazy.

We save 80% of our income (my husband and I are both additional rate taxpayers). The rest is spent on eating out (sometimes fine dining), holidays, clothes for the family, renovations (we always have a project of some sort going on), personal trainer, personal pilates instructor, cleaners, private, taxis (we don't drive), groceries from places like Borough Market, Eataly, Nottinghill Fish Shop, Natoora etc. I guess we will be paying for private school come September.

Oh, seriously - jog on. Interesting first post or name change. As you say - interesting!

I like to have my chauffer drive me down the streets in my open topped Rolls Royce while I throw tenners out with gay abandon, while laughing at the peasants rushing to gather them up.

We save a lot of ours as are about to move house. Since I went back to work and we became “high earners” we seem to have (or take on) odd jobs each month that prevent us having loads left over though - doing a bit to the house, replacing the car, boiler broke!

Private pension, I do treat myself to the odd nice new item of clothing and toiletries but also get most off Vinted or cheaper skincare brands.. we eat out once or twice a week and so maybe 2 holidays a year. We also have private health insurance (we are both freelance so income replies in good health!) life insurance etc.

I’ve never given it any thought what high earners spend their money on, it’s seems a strange thing to think about really. It’s usually the same stuff anyway - big mortgage, cars, school, holidays, high end supermarkets (or food halls). I mean there’s only so much you can spend your money on anyway.

DH and I are both additional rate tax payers with a gross annual income of c. £1.2m. We have 3 DC and our monthly outgoings are about £20k per month. £10k goes on our mortgage (we live in London and recently bought a £4.5m "forever home"), £3k on nursery/school fees, £3k on a live-in nanny (2 of our DC are pre-schoolers and 1 attends nursery but only in the morning), the rest goes on food, bills (inc. hefty income protection and life insurance policies) and discretionary spending. We don't spend much (if anything) on "luxury" items. My husband and I go out for dinner about 3-4 times a month, but usually choose a local restaurant over anything fancy. We wear nice clothes but nothing designer. I'd rather have a simple handbag with no obvious branding costing max. £500 than a Chanel handbag. I spend a fair amount on the kids - clothes, toys plus museum/zoo/aquarium/theatre trips - but I don't go crazy (eg I would never spend £80 on a pair of kids' Veja trainers - they wear Clarke's). Spending £20k a month leaves us with about £360k of post-tax income which is excess. We spend the excess on one big holiday a year - usually 10 days in a high-end resort somewhere sunny - which costs around £15-20k depending on where we go; collecting art/antiquities - we spend about £10-£20k a year buying art, ceramics etc; making charitable donations - about £10k a year; buying wine - we have a cellar with a leading wine merchant and invest £10-£20k a year in en primeur wine (this is really a form of saving as we plan to hold it for the next 20-30 years then sell it rather than drink it... although we may end up drinking it 😂); the rest goes into savings. My kids all have their own ISA and pension funds and have done since birth. It costs nearly £36k to put the max. allowable amount in every year. The plan is for these savings to pay for the kids' tertiary education and/or a first home. My husband and I both max. out our annual ISA and pension allowances too - this costs us £48k every year. The rest is put into taxable savings accounts. I manage all the finances and ensure our savings are invested with an appropriate amount of risk. We would never leave our money in cash (beyond a £400k "buffer") because its value gets eroded by inflation. If I have a vice, then I would say I spend too much money on art (but our art collection is now quite valuable with some of it having increased 10x in value since we bought it, so that pays for itself). I also use Deliveroo too frequently! I expect our savings rate will go down over the coming years as our youngest DC start at private school. Then a very significant proportion of our income will be spend on private school fees - about £75-£80k a year while they are at prep school and up to £120-130k a year if they go on to attend a private London day school. Hope this is helpful and/or interesting.

What school costs £130k a year?!? Even Eton isn’t that much and that’s one of the highest in the uk.

@Richteabiscuitlover

My husband and I both max. out our annual ISA and pension allowances too - this costs us £48k every year.

You can put £40k into ISAs alone between you, so a bit confused by that figure.

We don’t earn quite as much as that but we have a decent chunk of money in premium bonds as savings. My entire salary goes on school fees x 3 and music tuition. Rest of money goes on paying off mortgage as soon as we can. We don’t spend extravagantly on holidays or cars etc. We don’t exactly penny pinch but we are aware that things could change dramatically and want to have a decent buffer to be able to pay mortgage and school fees so children aren’t affected. We did also invest in a rental property that’s meant as a pension investment but we could sell if necessary.

It's >£40k per annum for a top London day school and I have three DC.

We each put £20k into our ISAs, which gets you to £40k. As we are very high earners, we are subject to the taper on annual pension contributions and can only add £4k per annum to our pension funds. This gets you to £48k. We will be able to add £60k in the 2023/2024 tax year as the limit on annual pension contributions is rising to £10k.

You might be better off putting your premium
bond money in a low coupon short-term Gilt. Gilts issued during Covid when interest rates were super low (0.25%) now have a yield to maturity of up to 4%. As only the coupon rate is taxable, the yield you earn from buying at a discount (which is all but 0.25% of the 4%) is tax free, so it's a great way to save if you're a higher or additional rate tax payer. It's equivalent to earning an 8% pre-tax return on cash in a savings account. Maybe worth exploring with your financial advisor.

Biggest expense is mortgage, followed by schooling and childcare. For 2 DC it’s…

• School fees £32k
• Uniform & school shoes £2k
• After school care (term time 34 weeks) £8.5k
• Holiday clubs (14 weeks of 18 weeks school hols) £7k

So £49.5k a year from net income.

Then there’s the weekly activities…coding, multi-sports, Tae Kwan Do, gymnastics. No idea what we spend on their everyday clothes, trainers, coats etc per year. Birthday parties must be another notable outgoing, as they’ve had 3 this weekend!! They eat a ton of food too… no one told me kids would be this expensive. Recently bought second fridge 😂

After that I think holidays, insurances, commuting, car expenses, eating out, cleaner, gardener, outings, haircuts etc. I’ve never worked out the total. Actually, I don’t want to work out the total!!

@dillydally24 sorry, I took it that you were talking about this year with the increased taper.

:)