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?

I get what you’re saying but here’s an example from me as to why that’s a bad thing (never mind the trickle down economics idea of they should be spending to keep others in jobs etc.)

early days of covid and the pasta run. Everyone bought the normal pasta then all the smartprice pasta. I could manage the premium price pasta so I was ok (wouldn’t normally) but if the person who normally bought smart price couldn’t get it what do they buy?

same with lots of goods and services including housing. It just pushes up demand and this pricing for cheaper housing if everyone goes for thst option.

Theres definitely limits though, paying stupid money to borrow a car and getting locked k to contracts for example is nonsense.

The competitive misery on here is really sad. We shouldn’t be picking other peoples expenses apart and telling them they don’t need a bedroom for each child in a 2 child house and broadband. Some of these expenses are really basic and people SHOULD be able to comfortably afford those.

We should be asking why people cannot maintain a basic standard of living rather than slagging off people who have different expenses from living in different parts of the country

Agree 100k isn’t a huge amount in central London or the SE, high mortgage, couple of kids in childcare, maintenance payments for other kids, or kids in Uni. It adds up and of course you can’t just say it’s mismanagement of money without knowing the facts. If person lived in north east in a 100k house with no mortgage and no kids then yes, it’s most likely mismanagement but it’s not a given no matter what.

Also people think of 100k and forget you’re 40% taxed on a lot of it, yes it’s a lot of money but for someone who lives in the SE I don’t see it as a huge salary to be honest

@toomychtiss this is my experience of living in London. The only people I know with expensive leased cars and designer clothes live in social housing so have small outgoings on rent/mortgage. Parents at DC’s state school all drive old cars, go on UK holidays or a self catering somewhere from the chat in the park. They must earn over 100k as they are doctors/lawyers etc

@jumblemumblet so you get 23k a yr & rent is just under 10k a yr?

Without childcare costs and student loan payments which total £1,500 a month I’d be laughing. As it turns out I’m working out how to keep a 2 yr old warm this winter. We do not mismanage money. One of us is an accountant 🙄 we are still going to struggle.

@Mycatsgoldtooth the ones I know who have the holidays, cars have lots of family help eg got on the ladder in their 20s, cash to do up house, move up ladder et.

I’m a single parent with an income of around 60k. When I was younger I thought I’d be loaded on that amount but in reality I don’t feel any better off than I did when I was on 18k. My expenses have gone up massively, people tend to live to whatever their income is.

Council tax, energy, broadband must be another £300 a month at least.

I saw this on Twitter and thought it really summed up so many of the threads you see on MN where families on 6 figure salaries claim they struggle-

‘people who suggest that my £580k salary makes me a wealthy man simply aren't taking into account the costs associated with sending my four sons to Eton, maintaining a fleet of luxury SUVs and living in a flying castle’

😂

Let's do a basic comparison of 2 parent 2 pre school child households.

Lower income from 2 earners part time - can mean housing association house, subsidised or free childcare, 1 car as can offset hours, child benefit.

Higher income household from 2 earners full time on £40k and £60k - full mortgage and house maintenance (probably astronomical for the same value house) +1.5k, full price childcare to enable them to work full time +2k, probably also need 2 cars and petrol and insurance to both get to work +.4k, might not get child benefit -.2k, likely student loans +.6k.

Conservative estimate for my local area gives an extra cost for the second household of around £4k a month post tax. At 40% rates you have to earn 5.6k per month to make up that difference which is around £67k a year. Extra. To get the same standard of living. This is even London or SE prices.

So assume they spend the same on food, holidays, birthdays, Christmas, one family could be on £30k and one on £100k and, for that period of time they would be in the same financial situation. That's ignoring the extra costs of free time - needing to pay extra for convenience, extra on DIY, not being able to shop around - or the extra NI, or any extra family help.

Obviously these are fairly extreme examples and I appreciate plenty of people on lower wages don't have those advantages. Equally the higher wage pays off in the long run. But if you'd accept the first family on £30k are struggling why wouldn't you accept the second family on £100k are without knowing the full picture?

The issue is Those on £100k live within their means, and then the goal posts change; energy bills go up 100% etc. Now they are taking about increasing interest rates ; someone may have a mortgage of 900£ then their term ends and they are now paying £1300, so actually they might be struggling to pay fuel bills and do food shopping.
Its not as simple as “just downsizing” moving house is expensive! Estate agents and stamp duty etc.
Renters can at least downsize without losing too much.

what sort of houses are people buying?
well a 3bed semi detached bungalow in need of serious modernisation is in the region of £500k+ where I live so work out the mortgage on that and factor in childcare costs etc if you’re a young couple with kids!
oh, and I’m nowhere near London.

If mortgage rates go up to 6% as currently forecast, prices will presumably start to drop anyway, so we won't need to downsize just down value.

Thanks very much Liz Truss and Kwasi Kwarteng!

Yanbu. There is a lot of surface wealth, where people have all the trappings but with no actual savings to fall back on. It is important to build up enough savings to fund the bad times, before spending so much on the rest. All fur coat and no knickers, as my mum would say 😀.

We have a very good household income - around £150k a year, and we are always overspent. I can confirm that I am absolutely terrible at money management. I have made some good decisions - kept our mortgage low and didn't move when we could afford it. Instead I've spent more money on holidays and caravans and meals out and a hot tub and haven't saved anything. It's total mismanagement and I need to be better. I absolutely agree that it's ridiculous to be on our income and to be in this position, and I would never compare us to someone on an average income who is struggling. So yes I'm worried now and its my own fault and I'm trying to improve my money management. We do have choices that will improve things but then I struggle with the idea of doing a job I absolutely hate and not having the niceties that make it seem worthwhile. I'll no doubt get slated for this - and so I should. It's a bloody stupid position to be in.

Er no, they are not. People with 6 figure salaries might have to downsize and put their kids in state schools. They’re not going to have to live in and b&b and use a food bank.

A smaller house or less expensive house where? Houses in my area are 1.2 mil for a small house. That's not even affordable for most people. Rent is about 4K+ for a family of 4. Some people have no family around so rely on childcare. We need to get to work and school run easily - not everyone has to live like you.

I see a lot of “ they could downgrade their lifestyles”.

Those on a low income trajectory could also choose to have less children?

why is the latter acceptable, but the former not ?

Around £90k joint income here. Around £80k until a couple of months ago, and very grateful for the increase.

One of us with student loan repayments (around £200/month). Mortgage isn't extravagant and luckily locked into a good interest rate for another three years. Massive gas/elec bill (I think we're over paying, but that just means I can afford to refuse the next DD increase). Nursery and after school coats. Travel into London over £500/month for one person, about half that for the other (thankful for hybrid working).

I know we're in a very fortunate position. We can still currently afford to save each month, and if bills more go up we can cut the savings and still pay the bills.

But I'm not going to pretend I'm finding it easy, because I'm not. This kind of money seemed like something of dreams a few years ago. But we don't have fancy holidays. Car is functional, not flash. And that's one car, not two. I shop second hand wherever possible.

I'm not starving, but it's a change in lifestyle that I don't like!

I think a family of 4 in London with a large mortgage and the at least one child in FT childcare could actually be struggling a bit - certainly losing all their discretionary spending money when energy bills are factored in.

And it is a genuine economic issue that the government has not considered this - even if those households are just losing their discretionary spend and not enduring hardship beyond that, that's a lot of households not spending money on eating out, theatre, house decoration, building work, with the resulting impact on 1000s of small business, arts and culture.

You could move to another area.

I’m not saying you should or that it wouldn’t be shit, but I think there’re wildly varying interpretations of ‘options’ on this thread.

That's our joint household income. We're not struggling but we're not rolling in it either. We don't own a giant house or have a ridiculous mortgage, we drive a ten year old Skoda. We don't spend crazy amounts of money on several foreign holidays a year, we don't have buckets of savings and the last week before pay day is always a bit tight. We have huge childcare bills which probably accounts for most of our disposable income. Obviously we're very privileged to have the money coming in but it all goes out again very quickly on not very exciting things!

Ive voted YANBU but we are definitely feeling more stretched on this income as a family with 2 dcs.

I don’t feel we’re struggling as we have more options, cc available with loads of credit (now not used) so there is no fear involved, which makes all the difference imo.

But, yes, family income gets spend on all sorts and we are cutting back on expenditure since a few months. But there is no way we can compare with low income families as we’re not afraid - and that’s the key in this.

Purely down to mismanagement?

No, I wouldn't say so. We have had a series of largely unforeseeable high consequence events (global pandemic, war in Ukraine etc) in a short space of time that have seen costs spiralling in a manner that simply wasn't anticipated. How do you propose families plan for every unimaginable or extremely unlikely economic eventuality?

Don't get me wrong, my concerns are very much for those at the bottom of the ladder but I don't think there's any fair reason to sneer at the better off who are feeling the squeeze. Sympathy and compassion are not finite resources.