'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.

The COL crisis is definitely an issue for anyone on a middle income and I can imagine it's tough adjusting to fewer holidays, nice clothes and meals out etc. than before, but as someone who moved to the North just before the COL, and subsequently had a pay rise putting us into this income bracket, it's hardly gruel and sock darning by candlelight. We might not be rolling in luxury but we live a comfortable life on that salary.

I am skeptical on this. Have you missed out that you are paying for private school or something? Otherwise it sounds like you aren't very good with money.

I can perfectly well understand why people on £120k feel squeezed. Rising mortgage rates, childcare costs, commuting costs, and higher prices for food. I've never felt more grateful to have had decent paying jobs in the north of England.
We are now retired, and our mortgage was paid off 12 years ago. Our adult DC has moved back in with us as their lease ran out and they had been made redundant. Thankfully they got a good job pretty quickly and are now saving like mad as they want to buy a house at some point. They realise that they will probably never have the chance to save as much as they do now once they move out again.

Absolutely. This is a great post. We fit into this household income, no kids, and while we're not struggling we don't have much left over. I spent my teens and 20s working so hard to get where I am, and honestly? I feel like I do deserve a better standard of living than what I can realistically afford.

You only have to look on the property board on here to see what people expect to have as a normal standard of living

I think the real issue is that often these middle earners have really sacrificed to climb the career ladder; extra training, rationalising the number of children they have, often missing family commitments for work, constantly trying to reach the next target etc. And now it’s like : ‘what for?’ There a creeping tax burden and the financial benefits just aren’t there any more. They’re contibuting to a broken system from which they’re not getting anything back (NHS, schools, social infrastructure) and the social contract is gone.

This in spades.

People are struggling even on higher wages which means that people at the bottom are even more trapped. More people on modest salaries are being pulled into paying tax, people on “good” salaries are being rinsed. Meanwhile the people right up at the top are quietly sidling off with all the money.

The whole system is creaking.

Indeed.
Maybe have a look for advance purchase tickets?! I mean we have wayyyy less than that and we can afford a lot of those things. We ruled out taking the kids to see Hamilton in the west end but we have done the Tower of London twice!

Is it school fees and a whopping mortgage?

i don't think 74k is SAHM money, its a ridiculous financial decision to make.

There are too many variables to say. We have around £100k between me and dh. 2 kids, one in school l, one in nursery (not yet 3 so not entitled to funding) the bill for his 3 days at nursery is nearly £600. Luckily grandparents take him 2 days. Let’s say I had another child at nursery, double that outgoing and we may feel the pinch. So just too many variables. We are very lucky to have a smaller mortgage because we rattled it when younger with what overpayments we could. If we didn’t and with high interest recently, we would be struggling more. just too many variables.
When one of us hit the threshold where we lost child benefit, I did feel I was missing it.
id say 60-120k is great wage but we don’t know peoples individual circumstances.

Someone here mentioned going on a 'cheap holiday to Butlins ' as a way of saving money. 2 adults, 2 kids in August in the lowest level apartment available (and it's probably not one you'd choose to stay in tbh...) is nearly £1200 for a week.

We are in the middleish of the bracket here and we can't justify the cost to take the kids to Butlins in the school holidays 😂

I left London years ago as I could not afford it on a low wage. I do not know how anyone manages in London unless they have heavily subsidised housing.
Many ordinary people have no pension or only statutory minimum. It is why state pension exists, it is almost impossible for most people to save enough and always will be. What people save for is to give them a bit extra money so they are not in penury.

@EasternStandard - what it means for me is that I meet my daughters from the school bus this afternoon and I can take them for cake if I like!

They are very clever and got scholarships so that gives me a reduction in fees overall.

That, together with an extraction of equity in divorce and investment a decade ago covers the education costs. Their father pays a small amount in maintenance.

I am now working towards an early retirement and part time work. I am 100 percent motivated not by money as a goal but what can it do for me; not how many holidays or handbags I have. It takes planning.

My view is that many people in London never reflect really on what they want their lives to look like. When I got divorced I totally reappraised what I wanted from the next ten years and the end.

A relative who has a much better wage than I ever had has struggled a bit, I think. No children. Married. His wife has the same wage. Both work from home.

They decided to buy a fair sized house in Dorset. Turned the stables into their office.

Took out an interest only mortgage... They've been in that house more than 25 yrs now, but it's not theirs. Their car is also leased.

They inherited a house and rent that out to someone else, but they seem to be perpetually skint.

I think this is very tone deaf. Lots of people are struggling to pay for the basics and services that support people are being cut.

But that's just the basic allowance. They also get a housing allowance (which in my area is over £300 per week! for a two bed flat) and if they have children they will get more money and the taper won't apply until their earning too much. I think UC is actually very generous. You'd have to earn a lot after tax to cover that.

“Someone here mentioned going on a 'cheap holiday to Butlins ' as a way of saving money. 2 adults, 2 kids in August in the lowest level apartment available (and it's probably not one you'd choose to stay in tbh...) is nearly £1200 for a week.”

I have several friends who go on cheap holidays via the Eurotunnel or trains. They house swap with e.g French/Italian/German families every summer. There are websites now for this kind of thing. You do have to pick a family with similar values or friend of a friend. It is becoming quite the trend.

@WearyAuldWumman - yes this is a lot of people. All fur coat and no knickers in financial terms. It's a life on the never never, upscaled.

Middle class people have problems with debt. That used to be shameful. Middle class people had assets. People drawing salaries and screaming about COL are not middle class. If they have no assets, then they are in real trouble. Higher salary is not wealth unless you use it for something. If you spend every bean of it then you will never get anything. You may look like you do, but you don't.

I think framing the discussion around the issue of affordability for people to have homes in large parts of the country even on high incomes and what can be done to address that is maybe less divisive than around how people on above average household incomes feel squeezed. In any case arguably what the average person should be caring about is it being impossible to staff schools/hospitals etc and the general lack of affordable housing in large parts of the country. I wouldn’t expect them to be caring about people on higher incomes than them being able to afford a certain standard of living.

Posts like this one make me wonder what planet most people live on. One where people live way beyond their means by the sounds of it.

I would do anything to have an income of £60k! As a lone parent on a fraction of that I do wonder how over-committed financially people have become. And over-used to luxuries or not thinking before spending money. That's not to say that the cost of living isn't harder to deal with at the moment.

Every purchase I make is carefully considered - will this save me money in the long term - can I get this cheaper elsewhere - can I afford it / do without it / find it second hand - could I walk rather than get the bus etc etc. I use a cheap phone on a sim only deal. I shop at Aldi and Lidl and don't eat meat. I walk, I don't have a car. I buy second hand clothes for myself and my kid. I seek out alternatives where I can't afford something. All holidays are taken self catering and very cheaply - couple of days in a hotel not too far away. I cut my own hair or go to the college. Etc etc. People need to learn to live within their means better.

I think this is surely expected given the current situation. All its saying is those on higher income have less, and therefore are less secure, less comfortable. Its just logical surely? If those on low incomes are struggling to cover energy and food prices at all, and we have heard an awful lot about this as well as some of us experiencing that, then what's surprising about middle income and higher earners not being comfortable anymore? It impacts us all when that group spend less you know, and it's a sign that the country has been terribly managed when those on very good incomes can't afford extra luxuries or no longer have the security of money leftover.

Sounds lovely, I feel similarly in many ways. Good on you

When dd was young and we were skint we used to camp for holidays. At a really basic campsite with no electric hook up. I have never used a credit card/finance for stuff which other people seem to do such as holidays. Some people do seem to have a crazy amount of debt. Do people just expect a certain lifestyle and then just be upset if holidays and a car and shopping at Waitrose and meals out mean things are tight?

There is a massive difference between 60k and 120k but I can't get my head round someone with a household income of 120k struggling, excepting perhaps London due to housing costs. No idea how cheap you could get an ok place in London even if not a really nice place. I accept I have Northern privilege

Isn't it all about lifestyle choices? Our income is 62k and we own our own home, one child, one car and don't struggle.

But we only go abroad once a year, take two other UK based breaks, we don't tend to eat out, our car is bought outright no finance, we cook from scratch without Hello Fresh or whatever. It would be different if DD was older and we were doing more city breaks/nights out but honestly who has the energy with a toddler?!

I don't think we are frugal by any stretch, we still get the odd coffee out, I have a daily blueberry habit that could go, and we save enough for holidays and to overpay the mortgage each year.

Aye. This pair had been getting money from their elderly parents. If there was a family meal and one of the parents was paying, this couple would be ordering extra bottles of wine, etc. They're down to one parent now.

Methinks that once the inheritance has gone, their only option is going to be to sell and move to a cheaper part of the country.

'Over-used to luxuries'?! I don't want to have to carefully consider every purchase. I don't want to get the bus, wear second hand clothes, stop eating meat, take self-catering UK holidays. For this reason I went to uni, got a good job, didn't have kids. Why shouldn't I have luxuries?

I would do anything to have an income of £60k!

Go to uni/retrain and earn it?