Is this lifestyle attainable?

[khlomoney]

I am 26 on £40k. I’m still not comfortable, is this a good salary? I have friends my age with full house renovations, all the bells and whistles and wonder what I’m doing wrong. Feel like a bit of a failure! Do I have unrealistic expectations of life?

My salary used to just cover my bills, so I don’t have any savings. Now, 70% of my take home pay covers bills…

I don’t have much left over with nothing to show for it. If I were to buy anything that costs over a few hundred like furniture or a weekend away, I’d still have to split it over a few months or save up or buy on credit? I still buy the cheapest and minimum groceries. I can’t really afford to buy clothes or shoes or anything that’s more of a “treat” (eg have a friend’s wedding coming up).

Aibu to think my salary should give me more breathing space or is this just normal life?

I have friends my age with full house renovations, all the bells and whistles and wonder what I’m doing wrong. Feel like a bit of a failure! Do I have unrealistic expectations of life

On this point, it is unrealistic to afford these things while living alone on £40k, but your friends likely have different circumstances. Living with partner, bank of mum and dad, inheritance, everything on finance and in debt, but that doesn't make you a failure.

Plenty of people your age will be earning half what you do and will be struggling for even the basics in house shares, let alone having some money left over for non essentials.

It very much depends where in the U.K. you live. I’m mid 40’s, on 62k but this doesn’t go far in the south east when it’s a single income household with kids. I can afford to buy a flat now after a recent promotion, but am wary with the high interest rates so I’m waiting

Whilst it’s a good salary for your age, it’s true that 40k won’t get you far these days, especially in the south and as a single income. So yanbu to think it’s not enough for much in the way of luxuries.

40k is a great salary at 26, given the national average. However it's tough if you're single.

I earn similar and I agree that whilst it used to be considered a good salary it just isn't really enough now for a "comfortable" lifestyle.

My cheap mortgage will end in less than a year and I'm genuinely not sure how I am going to pay it.

I also have a DC though at college and live in the south east. So it's fair to say I think you possibly need to look at your outgoings.

It's all so subjective. It's either your mortgage that's massive (and let's face it- most 26 year olds on a single income don't have a mortgage yet) or it's your lifestyle.

I'm more than 10 years older than you and it's entirely possible that 40k now is a worse salary than 34k was when I was your age, especially with the cost of living crisis.

Wage stagnation is a big issue, low interest rates masked it.

I don’t know anyone including myself who got on the ladder without help.

Great salary for 26, but YANBU to notice that it doesn't go far these days. When I was single and your age, I was on about £27k and struggled to save. I had to run a car as well for work.

Hmm, well I've just looked up current salaries with the employer I worked for then - it was a graduate scheme - and people at the stage I was when I earned 34k are apparently now on 46k. So judging by that alone I'd say 40k is likely to be a worse salary than I was on at the same age.

I wouldn't expect the OP to be on the breadline on 40k and it's still a decent salary for a 26 year old, but she's not rolling in it by any means.

Still, she has 40 years ahead of her to work, this is just the beginning. It's what she does from now on that counts.

Wow this is really inspiring, well done to you! Which industry did you enter? I work with data/digital 😊

I'm in Ireland so no idea but my biggest salary jumps came from late 20s to mid 30s. (Doubled in 8 years). Now almost 40 and now finding it more difficult to get to the next level because there's less opportunity in the sector.

Your next 10 years are the most important to grow your salary.

I don't think you're being unreasonable at all in finding that your salary doesn't go very far these days but that's a decent salary for your age and it puts you around the 70%ile mark for earnings across the UK. That sounds high but when you're paying rent/mortgage and all bills on a single income it's not actually that much unless you live in a very cheap housing area (and generally jobs that pay well don't align to living in very cheap areas).

Have you written all of your expenditure out? On these threads often extras are classed as bills. My DD lives alone, small mortgage £210 a month and has two holidays a year on £20k a year. She's off to the US next year. She doesn't do hair/makeup/nails, uses public transport, budgets and cooks all her food and is frugal on her heating. Her night out once a week is around £20. What's your price range for your clothes etc? Your left over salary is what some single people live on in total.

£40k isn’t a fab salary for a single person anymore. I don’t say that in a disparaging way BTW, it’s just that things have gone up so much. You’re really young though so you’ve got plenty of time to go up the career ladder. How about a lodger? £625 a month tax free.

You're only 26, most people aren't well off at that age.

I'd expect you to be:

• living in a shared house rather than your own flat
• eating relatively cheaply
• not buying a lot of expensive/branded clothes and shoes
• not buying a lot of expensive home furnishings etc
• not driving an expensive car on finance
• not having very expensive tech on finance

But I'd expect you to be affording

• a couple of holidays a year outside sch holidays. Not like all inclusive in the maldives, but (for eg) a sun holiday in spain/portugal etc, a city break in europe in air bnb etc
• socialising with friends - occasional inexpensive meals out, trips to cafes/pubs/bars, perhaps once a year a ticket for a pop concert or something
• ikea type furniture
• inexpensive hobbies - stuff like being part of a local choir, being part of a 5 aside team, going to the gym, owning a bike, going swimming, managing to occasionally buy a few craft materials if you're into painting or knitting or sewing or what have you.

Living alone is expensive; or to put it another way, having your own place is a luxury which many people will never achieve.

I am on 45k (31 years old) and in London. The big difference is my DH earns a lot more- £75k and we lived for 3 years with family (in London) and saved up £90k (in 3 years after graduation) for our deposit. This means our mortgage is much lower than what other Londoners pay and we have been overpaying. I have no student loan, and DH has only £5k left on his (as we overpaid on that as well) so by the time it comes to remortgage, the increased income from lack of student loan would offset the increase in mortgage. We go on a lot of holidays on account of being DINKY ( a weekend abroad every 2 months) and having a low mortgage for London. We overpay our mortgage £1k every month and we have overpaid DH's student loan with several thousand this year.

How comfortable you feel is dependent on a lot of things other than how much you earn, its how much your partner earns (if you have one), what financial obligations you have and if you had any help meeting these financial obligations. How much time have you had to service these financial obligations before they increased etc...

I know someone 3 years older than me who is probably on £35k (and her DH is not on much more) but her DH is much older and bought his flat in London many years ago so practically mortgage free. This is why she managed to buy a £700k family house (also had her own savings, she probably did live at home for quite a while as her parents are london based) and is still comfortable while someone on £120k and paying rent and single would struggle to afford it.

My salary used to just cover my bills, so I don’t have any savings. Now, 70% of my take home pay covers bills…

Presumably you are choosing to live alone, which is the lesser common option at 26.
If you are sharing then you're simply living outside of your means.

Most people share in their 20s to build a savings buffer and to have money to put towards a house deposit etc.

You have chosen to prioritise living alone which will obviously have financial drawbacks. However even in the midlands 70% of your take home salary suggests you are living beyond your means.

I'm older and therefore my mortgage is probably lower than most younger people's, and it's definitely a lot lower than it would be if I was paying rent, and I earn quite a bit more than £40k and you have basically described my lifestyle (apart from the shared housing!).

£40k at 26 is good given what the average salary is in the U.K.

Obviously depends where you live but when I earned £40k maybe 3/4 years ago I was comfortable on that. Although it was when I got to £50k that I thought this is enough if I earn more great but I can pretty much do all I want on £50k.

Your friends doing house renovations likely have a lot of stuff on finance like mortgages or loans to do the work. My brother (32) has just down a massive house renovation costing them £160k… all mortgaged… I’d feel so uncomfortable in myself having an additional mortgage of £160k! But some people do it, my brother very much did it out of impatience whereas my husband and I very much want to save a bit more before we make renovations to our house.

My husband was like this in his 20's.
He went to a private school & was comparing himself to people who had landed jobs in family businesses earning 6 figure starting salaries.

Stop comparing, it's unhelpful.
Appreciate what you've achieved and focus on what you CAN change & where you want to get to.

You're right at the start of your build phase and it sounds like you're doing well.
IME it's not 'average' to be converting houses at 26, but it IS totally normal to have to watch your money & save for treats. I lived alone at age 23 and can remember having £52 pcm (enough for 2 nights out and a top from Asda in 2003 😂) expendable cash after bills, but it was worth it for the freedom.

You're also in that sweet spot where you're financially independent, have your own place to call home but (I assume) none of the huge responsibilities that kids bring.

Just try to enjoy this time OP. You don't need tons of cash to do that.

YANBU that money doesn’t go as far now and wages have not kept pace with housing costs especially.
I earned way less than that doing a PhD in my late 20s and could still run a car, live alone and travel. That was 15 years ago and no way could I do it now.
I feel for you and upcoming generations, I do think it’s harder financially.

thanks for the life advice, really appreciated. My take home after pension/student loan is £2.2K. My rent is £900, no bills are included and they’re all just seemingly increasing.

I naively thought if I earn more, I’ll have more money to play around with, but I’m realising that I probably have underestimated the support of living with a partner/family/flatmates to share bills with. Probably should put myself out there more!

There's a few facters here. It is a good salary for your age, well done. Obviously cost of living has hit how far salaries go, but bigger factors are that you are single so covering 100% of the costs yourself, and also that you're at the start of your career so will be paying full rent/full whack mortage. Once you eat into a mortgage, years down the line, you wind up with huge breathing space financially.

Its not wrong, you do need to increase earnings as unless your parents are very rich/generous or your partner earns a very high income,there is a limit to how much you can stretch things (plus not great to completely depend on others). A lot of the people who cant afford the new mortgage interest rates or high rents are dual income as well. The trouble is these days, in order to get some security/a comfortable lifestyle you have to do everything perfectly. And this isn't just in London as the housing crisis is now bigger than london.

'The national figures also don’t tell the full story. Southern England has consistently been the least affordable part of the country to buy in – last year only the top 10% could afford the average home in the south-east. Buying in London is even worse, with the average home now beyond the official measure of affordability even to households whose income is in the top 10%.'

I take it you live in an area with similar costs to the SE if your rent is £900. £40k is not the top 10% of the country, you need to earn £60k to be in the top 10%. It is the same for rentals as it is for buying. DH and I are in the top 10% with combined income of £120k (£60k each), and our flat is below the london average at £392k (so that s how we afford it). Please don't feel bad, we are all in the same boat really.

https://www.theguardian.com/money/2023/jul/28/how-uk-house-prices-left-the-middle-class-behind