To ask what you think a reasonable lifestyle is for this income?

[Momeymoney]

They have a DS (11) and a DD (8). Mum and Dad both work full time and when combined their income is £155,000 before taxes. What is a reasonable lifestyle for them to live? How much can they afford to spend on cars, can they afford private school, holidays, etc?

that generation was lucky. I am 31 this year, i am not a boomer.

My mother in law is a boomer, she owns a terraced house in London.

She will die in that house. Whether it is worth £100k or £600k is irrelevant to her. She has 1 daughter who will never be able to move out. that house will pass to her, and that daughter has bigger financial problems that even a london house will not solve if she doesn't have a proper job.

They defo got richer from it

similar story for my parents

5% on a 300k mortgage is £15k per year. Plus repair costs. plus the opportunity cost of tying up your huge deposit in your house and not a high interest ISA. Is £21,600 to rent a similar flat such a bad deal given service charges and repair costs are all covered and you can invest your savings? plus move whenever you want.

Yes you may prefer owning regardless. I prefer owning too cos I would fear the landlord selling up (and not being able to find something suitable in the area). But i acknowledge that wanting such security is a financial cost to me. I believe its worth it but that doesn't make my flat an asset.

She will die in that house. Whether it is worth £100k or £600k is irrelevant to her. She has 1 daughter who will never be able to move out. that house will pass to her, and that daughter has bigger financial problems that even a london house will not solve if she doesn't have a proper job.

But that nots true for everyone. We got on the ladder due to a 6 fig gift from in-laws which in turn has helped us a lot. We have a lot of equity which meant we can put our disposable income into s&s. I know plenty of people inheriting 500k plus which defo improves their wealth.

You need to see a financial adviser with experience of the realitiies of the UK housing market rather than relying on an American website for your financial advice.

Yeah, they're trying to prove to themselves that someone they know doesn't earn as much money as they say they do, or is "wasteful" in how they choose to spend it, or whatever.

Weird and nosy. There are far too many variables for anyone to give a remotely sensible answer. Yet people seem to be feeding it.

Houses are expensive to run. There are maintenance costs that are a cash flow drain.

I think you are applying a strict balance sheet approach which is technically correct. However, in terms of the practical operation of personal finances most advisors wouldn’t tell you to focus on your primary residence as an asset (other than for the purpose of IHT or care home fees). It costs you money to have a house. It may be cheaper and more secure than renting but it is a cost. We have a lot of equity in our house but that is only relevant at the point when we can realise that equity until that point it makes no difference to our lifestyle other than peace of mind.

But agree for FTBs now it's another story

Except the OP said they already had children, in their first post. This post is definitely not coming from someone who is planning kids and unsure how to budget for them.

My bet is that it's a nosy neighbour/relative who wants to judge someone's spending decisions from a distance.

https://www.saltus.co.uk/the-financial-planning-journal/your-home-is-not-an-asset-or-an-effective-pension-pot

This is a UK firm.

btw since 2003, the average UK house has only increased in line with inflation. My flat did a little better, 15% above inflation as its in London but the growth has essentially flatlined since 2016 (which enabled me to buy in the first place and now probably will fall).

the reason for the affordability gap is wages have not kept up with inflation. But if you are looking at it as an asset, you need to compare it with other assets rather than wages. And only average wages have stagnated, for the top 7%, they have accelerated.

I wasn't replying to OP, I was replying to @Hufflepods who was incredulous that someone earning £150k could be unsure what lifestyle would be achievable with 2 kids on that income.

As for OP being more experienced as a parent, people post on here all the time to compare what other people are achieving in X time or spending on Y product/service.

My brother’s family earns almost exactly that between them. They have:

• no mortgage
• savings to cover overlap in school fees
• 2 kids in private school
• European holidays

There is quite a difference between "your home is not a pension pot" and "your home is not an asset."

That article's first line beyond the click bait headline is: Your home may not be an asset.

The article's penultimate lines are: I’m certainly not saying that homeownership is a bad thing or that you can’t make money out of your home because, of course, to a certain extent, you can. What I am saying is that your home must form part of a wider plan. It is something to aim for alongside savings and investments for retirement, not to replace them.
How much do you need to retire and more…How much income do you need to be comfortable, how much do you need invested and how to pay less tax...
When you think about it like this, your home may not be such a great asset after all.

If you take that advice as gospel, you should stop overpaying your mortgage and divert that money to savings and investemnts.

Why do you care?

I overpay my mortgage mainly because I want to keep my monthly minimum payment as low as possible when I remortgage next year. We overpaid my DH's student loan for that reason too, wanted him to get back the extra £400 per month as quickly as possible as would be useful during the childcare years.

I think we don't earn a lot (around £120k) so our focus for now is to increase our earnings so doing stuff that costs money- childcare, mortgage (housing security and easier to plan childcare costs around) is more of a priority than wealth building. its hard to build wealth from scratch without a good income!

I don't think more information is needed. This is a good income which allows for a comfortable lifestyle and choices depending on priorities.

its hard to build wealth from scratch without a good income!

It's hard to become wealthy when you're not wealthy. Who'd have thought?

(You have a good income.)

We earn a bit more than that and have done for a while. Bought first house in 1990s, so have been able to afford a very nice house with large garden in south east with plenty of disposable income. We holiday regularly, don't feel constrained on regular smaller extravangances (meals out, theatre tickets). We've never spent much on cars as they don't interest us. On a day to day basis we never think about money and easily spend less than we earn. However, we did not want to pay for private school. I think we could have done, but it would have had a big impact. We would not have done the 100k+ house extension and holidays would have been more modest. If we were starting off now we would not be able to afford our house.

For context at my surprise, we have a joint income of about £150k (some freelance so slight variability), fairly evenly split between us as a couple. Two young kids but bit of an age gap to spread high childcare costs.

Plenty of money for savings, nice food, takeaways, holidays, one bog standard car owned outright (don't need another and no interest), family days out, hobbies, clubs etc. Wouldn't want to do private school. In London.

I feel incredibly lucky and secure. Not the squeezed middle, because we're really not. I've had jobs where I've worked with people struggling on benefits and with billionaires. The latter have their own problems, obv not about affording things but it doesn't solve all of life's woes.

As you allude to, much of how people feel about this is mindset.

120.000 and that isn't alot? Flipping eck .

Too many variables but dh and I earn about £110k between us. We have a fantastic lifestyle (NI). House mortgage free, 2 cars bought outright (not overly fancy), no debts, have about 6 holidays a year (skiiing, centre parcs, all inclusive etc) and go to lots of concerts and eat out/ socialise a fair bit. I spend a lot on self care. Dc goes to grammar so no school costs. We also save in LISA and top up our pensions every month.

Re the home is not an asset point: for people who also like being at home and living in a nice home then it’s an investment in life/lifestyle.

we have quite a large house - 4 bed detached but could be 5 if you got rid of one of the many reception rooms. It also has an acre of land and part of that could be sold off for development if needed.

it forms part of our pension pot because of its size - once kids have flown the nest it will be too big for us and we can downsize and use the equity (we do also have pensions and savings).

But we are pumping money into making it lovely as we love being at home (and entertaining etc) so for us, it’s also an investment in our lifestyle - having somewhere to come back to each night that we love (I also WFH mostly).

If people don't think £120,000 is that much then please get out into the real world and get a dose of reality.

My DH who is the higher earner was on free school meals and also got EMA payments..he still thinks £120k isn't a great income.

Firstly the reason why he was on free school meals was because his mum was a bohemian type who actually didn't want to earn money. She wanted to work freelance and be free to stay in her home country for months at a time. She wanted time to write and also when her kids were young to be there for them. She got money and help from her dad to buy her house so in a sense needed far less than most people to begin with.

My DH's dad also had mental health issues which of course can mean earning money is frankly the least of your problems. His siblings all earn far below that but then they are also doing jobs related to art music or freelance writing. So yes I would paraphrase that to say that yes if you have mental health issues or are a freelance classical musician or novel writer of similar artistic profession, then £120k combined is a good income. I mean, regardless of how the economy is like, it is difficult for those jobs to pay well unless you are the top 1%.

But DH and I work in regular jobs in London in the financial services industry and £120k is not a good houehold income. A decent income is £120k each..We are trying hard to earn a good income so of course we need to hold ourselves to a higher standard than people who are trying to earn as little money as possible