To think if you are a family of 4 and struggling on £100k…

[LetMeSpeak]

That it is purely down to mismanagement.

I saw a debate on social media and I also know a few people on 6 figure salaries, have extremely nice houses and cars. Yet complain that they are stuggling the same way others with less money. Aibu to think if you are really struggling even in this economy, a lot of it is due to mismanagement with your money?

Good catchment area, 3- 4 bed flat, £500k here. So £100k deposit, 25 year mortgage, monthly repayments of £2k a month, factor in nursery fees of £1k a month per child or after school of £200 a month, utility bills of £300, council tax of £200. £100k salary after tax and pension would be £4.5 - £5k a month. Not loads left for a luxury lifestyle.

People need a buffer to weather storms particularly when you have a higher income.

People on this thread seem to think that those on low/er incomes don't have childcare or housing costs too.

Of course people on lower incomes have housing and childcare costs but they are more likely to get some sort of assistance with those things as well. Be it free nursery hours, child benefit, UC, housing benefit, social housing rents for example. People are not saying those on low incomes aren’t struggling the most, they are saying it’s not as clear cut as higher income = fine.

Surely people are moaning because this is all so unnecessary though? We’ve had governments making terrible decisions for the last 13 years and this is where it’s led us.

I'm only on the first page of this post and boggling at this statement.

£100k income is huge. It's more than five times what I bring in, and I am a single mother living in London

Well, the £100k earners will only be spending on essential living costs (mortgage, council tax, utilities) and childcare costs so they wont be spending.

This will have a knock on effect to the low earners as they wont be eating out, using hairdressers, hiring a cleaner, buying from higher priced small businesses.

And low income people who may rely on high income people using their services will ultimately suffer more.

Plus, if we do as this thread suggests, all the £100k earners are about to sell up and go buy all the cheap housing leaving none for the lower paid anyway, to make sure they're not overstretched or daring to have a spare bedroom 🤷🏻‍♀️

£100k in an area with high house prices and childcare costs doesn't go very far. It's definitely enough for unrestricted spending or wild luxury. It's not always easy to cut down costs either, you can't "just" downsize. That's entirely unrealistic (and would only drive up house prices in the more affordable sections of the market). When our combined income was just under £100k we were definitely heavily budgeting to ensure that we could make ends meet (and save a little). There was not a lot of give, and not a huge amount of extravagence (although of course some). We do live in a relatively expensive area of the SE, and had two children in childcare at the time.

That said, of course people on that income have many more choices and more flexbility than people on far less. That is undeniable, and stating otherwise is simply unimaginative.

definitely not enough that should say.

Does that include any benefits you are on?

The other point is, do we want people on £100k to feel rich? The tax on £100k is high, and we want high earners to spend on things like, building, redecorating, hairdressers, salons, kids days out as it supports the economy.

If people on £100k are spending all their money on mortgages, pensions and childcare, that’s bad for the economy, and what hope does anyone else have!

We want an economy where high earners feel wealthy, and therefore, lower earners can earn less and still have a nice lifestyle.

Exactly! Huge mortgage does not necessarily mean huge house. I work in mortgages and when I first started over 20 years ago I used to get all excited when I'd get an application for a London based applicant. Buying a property for £200k which seemed like so much given what you could buy in my hometown back then. Then I'd look it up on Rightmove and see it was a very small flat or tiny house. Same flats are probably worth around a million now but still the same size you just need to earn a lot more to buy one

So you earn less than £20k a year and live in London? How do you manage? How do you afford rent?

@ArcheryAnnie I would also be keen to know, perhaps we can pick up some budgeting tips

House prices have gone crazy round here. We bought 5 years ago and our house has increased nearly 30% since then. Friends who bought after us are paying at least another £500 on their mortgage for what's essentially the exact same house.

I think as well having children makes a massive swing in people's finances. You can be happily saving £1k a month feeling like you've got a decent buffer and lots of spare cash for holidays. Then boom, maternity leave eats into your savings (which you've anticipated) but then childcare costs take that whole £1k a month saving so you can never replenish. Add in a couple of minor emergencies like boiler needing replacing and in a few years you can go from feeling flush to feeling the strain.

I agree. Whilst I appreciate that houses are expensive in London, whole life doesn't revolve around this city and yet there are people who struggle on £100k up north... This is ridiculous.

This! Alot of people claim they are 'hard up' because they are suddenly left short of disposable money when they have committed too much into expensive possessions, hobbies, lifestyles and assets and have got overly greedy, stretching their income as high as possible and not wanting to come back down to earth and give any of it up.Then wonder why there's issues when they suddenly can't afford day to day costs.

And some people are too snobby to shop at Lidl/Aldi or buy anything unbranded or second hand.Some also have savings they just don't 'want' to use, or a house full of un-used stuff sitting there that they could actually sell and make money on!

IMO the real people 'struggling' try hard to make and save money however they can, and don't have savings to use or luxuries they could cut out.
THEY are the ones who get my sympathy and support.

@InThatCaseCanIHaveARaise - mine will also likely be sold for care home fees. We have no choice but to both work and pay for childcare fees. I would love to stay home more with my child. We will come out at the end in the same position as you, our larger income just paid for our house which we paid more for but will likely have the same value as yours at the end.

But statistically they don’t spend money on those things they actually just hold the money in pensions, property and rainy day investments. As has been proven on this thread by the real life budgets that have been posted.
they are actually no more used to the economy than somebody on £20,000 it’s just that the numbers change/shrink.

to move to the levels where people are actually paying for services you actually need to go over £150k which is what the lovely Liz has done in the budget last week.

@BradPittsLeftTit

So you have two children and a four bedroom house and make significant pension contributions - are those not choices you have made?

Sorry but I don’t know what you’re expecting when you’re on £120k and have at least two different areas you could compromise on my reducing cost…but won’t?

Which makes me wonder how do you get people in those brackets or everyone spending?

It's a bit of a catch 22 as well if you want people to feel secure that their pension and savings will match inflation you need higher interest rates then in theory (I've not tested this) would people actually invest less as a % of their income so have more money to spend in the economy?

But higher interest rates mean more expensive mortgages and loans so would that mean that all the spare cash is eaten up by that?

How do we beat inflation? I think it's via producing more but we aren't really a manufacturing country anymore although the current exchange rates might help with this.

If you had £100K you have the following expenses you don't have:

You'd pay £7486 income tax and £5316 on national insurance each so a total tax bill of £25,604 (this is two lower rate tax payers so would be more if only one of you was earning)

You would be expected to support your DC at University so that would be ~£12000.

You'd have a mortgage, say it was 2.5x your income so £250000. With a 10% deposit you'd be buying a house slightly below the average house price and spending £20000 on your mortgage with current interest rates.

Just those three things added together are £57000 so suddenly that £100K doesn't look so much does it?

Whoa whoa whoa whoa whoa you’re not going to have an 18-year-old DC who requires £1000 a month in financial support at the same time as having A mortgage with just 10% equity in it are you that’s just ludicrous ?
are you assuming that the hundred thousand pounds is split equally between two people or else your calculation seem to assume that both parties are paying £25,000 in tax and national insurance i.e. on £100,000 each and therefore it’s a 200,000 income.

no wonder we’re all in such a throth with these numbers be made up as people go along.

@ChilliBandit well we’re all screwed regardless of how much we earn or how much our home cost us

@ChiefWiggumsBoy I'm not sure what your point is? I'm not 'expecting' anything nor am I saying I haven't made choices, as everyone does

What I am saying specifically to the OP is that it is possible to be a high earner, not to have a massive mortgage, not to have expected the cost of living to increase as it has. To say anyone feeling the pinch on this salary poorly managed their money is simply not always the sweeping generalisation the OP seems to think it is.