'Middle class earners' - struggling to cope financially and can no longer afford comfortable living standards despite having household incomes of between £60,000 and £120,000- Guardian

[fluffykittens208]

https://www.theguardian.com/business/2024/mar/04/middle-class-workers-mortgages-bills-tax

Excerpts:

'Scott was just one of scores of middle-class earners who shared with the Guardian how they are struggling to cope financially and can no longer afford comfortable living standards despite having household incomes of between £60,000 and £120,000.
A report last month from the abrdn Financial Fairness Trust highlighted how Britain’s insecure jobs market and high housing costs are leading to the growth of a precarious middle class. These households are struggling to maintain a decent living standard on joint incomes as high as £60,000 a year. That compares with the median gross annual earnings for full-time employees of £34,963 last April.'

“It does seem that the only way to be on a middle income and doing OK at the moment is to be a Dink and living in the north.”

'Although respondents with children reported more precarious finances than those without, millennial childless couples say they barely have any disposable income either.'

Personally we am coping ok with a household income of £120k and still eat out/have a lot of city breaks, but I wonder if that is only because of our specific circumstances

1. small 2 bed flat in zone 3 London so we don't have a car and where it is possible for DH to cycle to work. Would probably always stay in a flat even if income doubles so it makes more sense to stay in zone 3 if living in a flat.
2. were able to live at DH's mum for 3 years while working in London and bought in 2019. We were able to overpay a mortgage on 2% interest during the pandemic and plough our pandemic savings into it which means the new mortgage rate isn't as painful.
3. fertility problems so we are still DINKY and unlikely to have more than 1 child (am already 32 this year).

As a disclaimer i don't think the chancellor should cut taxes despite us all feeling the cost of living crisis as 40% of tax revenue comes from NI and income taxes so if they cut taxes, they would have to cut services and I have no desire to pay for healthcare privately in my old age.

But it feels very strange to read about people struggling in the news on our household income, probably means that the income threshold to be 'comfortable' (without very specific circumstances that lower your cost of livin) is much higher! Would hazard around £150k to £250k now. Basically we are going to be a hugely unequal society where only the top 5% can expect all the middle class fixtures and the rest of us have to pick and choose or live a life of penury and no luxuries i.e. car or property in expensive location; 2 children and no savings or 1 child and savings. Far luckier than those in the bottom 50% obviously but i am not sure how you can say you are middle class when the only reason you can afford to eat out and have nice holidays is cos you purposefully cut back on things people used to expect if you were doing semi well i.e. 2 kids in a suburban semi and a car on the driveway.

Honestly, as someone who is stuck at just under 20k a year with 3 kids I honestly find this kind thing eye-rollignly rediculous. 60k for a family if down south is tight yes but 120k? Oh the life I could live with another 100k a year. I'm very tired of hearing people who are comparatively rich compared to me, (I appreciate 120k is not rich on the whole but comparatively it really is) talking about how skint they are.

the Guardian lost the plot - a long time ago.

A lot of the middle class people I know made silly financial decisions in the years of QE as they assumed that interest rates would be rock bottom forever. Taking out overly large mortgages, etc. Anyone with a modicum of economic sense would know that the rate cycle would change so that's on them.

I just think that some of the middle class needs to recalibrate their ideas of what a 'comfortable standard of living' means.

To most people, having a safe and warm roof over your head, being able to eat well and healthily, having a car, a holiday per year, kids have basically what they need, decent sociallife = comfortable standard of living.

If others believe 'comfortable standard of living' includes such monied privileges as several foreign holidays a year, wraparound paid childcare, a cleaner, two cars, designer gear and homeware, paying for your kids' uni tuition, cheap credit card debt, then...yeah, that's not the Government's fault, it's those individuals who just need to recalibrate their ideas a little bit.

It's fine, the rate cycle will turn again soon (although we're unlikely to get back to rock bottom wihin the next decade, in my view). The key is not to take out too much debt whether that's secured or unsecured.

What is a DINK ?

Dual income no kids

U Facking wot M8?

These the same people that reckon those on Universal Credit get too much when Unemployment is still at £340 or so a month?

"I can't exist on 70k... But those on less than 15k are living it large with holidays and big telly's."

You answered your own question... Two incomes, no children. So no, you won't be struggling.

If you read most if the "struggling" posts on Mumsnet, its the childcare that's causing the issues. It can be over £100 per day per child. £25000 per a year.

@Universalsnail I know the feeling. £100,000 round here would get you a great life, however with London property prices It'd be eaten up pretty quickly. I really don't know how people can afford to live in the South East. It's gone beyond ridiculous that 100k has become anything less than a good income.

Right! 25K a year here with two kids. Double that would be life changing but people are struggling on more than that?!

when i worked i had to have 40 hours of paid childcare a week and we both had to have cars. There is practically no public transport here and it absolutely doesnt run super early and late (which commuting often entailed).

some people's costs are just a lot more than others.

IL's have a 3 bed house worth 100k in the north. super cheap housing. son's rent was £900 a month for a room in London. Individual circumstances vary a lot....and alas we cant all work in super cheap areas as our jobs dont always exist there, especially in the private sector.

I honestly think interest rate rises have caught alot of people out (of all classes) people just got so used to low rates, The best five years will be hard tor an awful lot of people.

Duel income no kids.

Let's face it they don't have a clue what living standards are like for those living on less than £22k a year, or even up to £30k. Their idea of comfortable living is actually privileged and luxury to the majority. This is were a life swap would be great. The old rich house/poor house was great for that. The WC are being told that they should cut their food shop and turn off their heating. The MC reset dropping down their holiday destinations, holding on to their cars a couple of years longer and buying cheaper wine.

Many middle class people appear to have overlooked the fact that they're actually middle earners who have, unwisely, overstretched themselves financially.

I agree with your description of what a ‘comfortable standard of living’ is, which we usually manage on a household income of £50k (living in the north, one child, small two-bed terrace), except last year when we had expensive roof repairs! We are both from working class backgrounds but went to university and have ‘professional’ jobs, so I’d say we are lower middle class in terms of income.

But I don’t think wraparound paid childcare should be considered as a privilege - most people need such childcare just to do their jobs!

This is absurd, and prices in London/SE are not that expensive. I live in zone 3 (house), and have 3 kids and earn 70k. I'm a single parent (by choice - so no other financial support). Right now things are tight because of nursery fees, but they defo would not be on 120k! The idea of couples without kids struggling on this kind of money is just absurd. Get a grip. Sort of crap you expect from the Torygraph frankly.

Similar to what I was going to post

Many on a good wage and many on a low wage appear to have missed the boat about 'Prudent spending and savings for a rainy day.'

Those that feel the thread is a "wind-up" etc are saying this as they have no comprehension of the situation and wrongly assume that earning good money means you are safe/unworried etc.

The fact is, if you are earning, you need to ensure you dont try to run before you can walk. Other than a loan for the property you live in or business, do no by on credit anything. Why would you want to but a used car for 30k and pay 40k for it? Why would you go on hols costsing 5k and pay 7k for it via cc/etc

People on higher incomes and those on lower/avg incomes, many with mortgages feel into the usual trap where they could not see interest rates shoot up and hyperinflation

Always try to have a years worth of spending in the bank, it goes a long way and often you are back on your feet. Extend mortgage period etc but talk to them before its too late or talk to LL

FM's may post insults at me, that fine as long as at least one FM is saved from putting their property/like at risk of them losing their home/etc.

Always start to cut back if you see trouble ahead and never buy anythin on HP/etc other than as mentioned above

Reltatives of ours - wanted to move out at 21 from parents home - his dad gave gave him a good speaking to - that guy moved out three years later and noted the money he saved resulting in a much larger deposit for a house.

Of course its your choice, I know that, but we are all different in every ways at times

Well quite, and have assumed they no longer need to budget.

We kept up the habits of our frugal years of no money and, now we fall in the band this article talks about, still keep an eye on our spending, plan for how we’ll fund things we need without borrowing, and manage our family life quite well.

I know a lot of people in that bracket who are struggling. All have children with childcare fees or school fees. It’s the inflation of prices which has eaten the disposable income along with remortgages.

our mortgage is going up between 200-300 pcm. And that’s a sensible where we bought a house only 2/3 of the value we could have borrowed. That 300 less a month plus 900 childcare and then weekly food shop inflation is the difference between going out for a meal/saving for a break somewhere and not.

TBH It’s the difference between having money for an unexpected issue eg new car tyre and having to put it all on a credit card.

Struggling is all relative. They are still able to book lots of foreign holidays and eating out, it’s probably now they are just needing to choose between Paris and Barcelona rather than just saying we’ll do the other next month. That idea of budgeting is a wake up call making things seem tough

Agree. I swing from feeling a bit sorry for folk whose mortgages have shot up and then thinking “you shouldn’t have borrowed so much” - for example, my 3 doors down neighbours - she’s a nurse (top band 6 so 37k) and he works in the bank (teller type position so not “a banker”). They’ve got a 4 bedroom house (2 DC) and both were driving PCP cars - she had a Range Rover.

Now really struggling with the mortgage rise and general COL crisis. She’s already downgraded to a Volkswagen UP and they are talking about moving which entails their DC moving school. It’s really shit situation but could have been avoided.

i have the foreign holidays but no car. when we have childcare probably wouldn't go abroad quite so often. definitely no designer gear or homeware.

our flat is a small 2 bed and even if we upsize it would probably still be another flat cos i would rather prioritise education/have holidays than a big house.

But thats the thing, if you need to pick and choose, who are the people with the houses and cars in the SE? Even in London, only 50% of homes are flats, and i believe everywhere else its 20%. Some terraces are the same price as flats but they are still th eminority.

Are they all people on £200k upwards. I can believe that in my neighbourhood but I can't believe that its the case in all the little towns and suburbs that are in the london outskirts!

Our household income is around £120k, we have 3 young kids and we’re perfectly comfortable. Mortgaged 4 bed house, run one car between us, kids go to plenty of extra curricular activities, we have one holiday abroad per year and a couple of mini breaks in this country, and we manage to save a decent wedge each month. I guess if people have overstretched in terms of their mortgage or deem ‘comfortable’ as something different to me, I can see that they may struggle.

I can kinda see it though, we have about 90k household income after DH overtime and it's not this huge amount of money people seem to think.
I work two days a week and my wage is almost exactly our nursery bill so I'm essentially earning to pay for that and get out the house.
We don't go on giant holidays and own both our boring cars outright but we also aren't worried about paying our bills, although this month we had a car insurance, boiler go bang and a new nursery bill after the end of Mat leave and that all hit us hard. I do just think some people think we must be rolling in it whereas we still have to budget carefully

They have as they were easily led. Older people on the whole will never forget the 80's overnight hikes. Thnakfully, we'd oly bought our house a few years before that and had money in the bank and were both working 45/50 hours a week to save up to buy a BTL - so we were ok but many lost their homes around that time

Brokers dont like to talk about interest rates shooting up - its up to you to decide.

When we had mortgages, as far as i am aware there were no fixed period mortgage rates, so we tried to be prepared for hyper rates as best as we could by ensuiring we never bought anything on HP

You can only really compare net income after housing costs - mortgage or rent.

Sure mortgage is investing in an asset but posters saying they earn £24k and are fine presumably aren't paying £15k a year in rent out of that income?

I say that as someone who is ok on our income because our mortgage is low, we don't have holidays but I have very much noticed that our standard of living has gone down despite having £10k more income a year than pre Covid.