'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.

This was bound to happen.

So many good earners moved into houses they could barely afford when interest rates were cheap. They also saved money by not travelling to work. Then interest rates went up. Maybe now its affecting them and not just those who struggle with much lower salaries change might happen ...

I've always been very cautious with money and I've had to be as a single parent earning very little for years.

I've got no sympathy.

Could you replicate your choices and lifestyle if you were 20 years younger?

If everyone lives like you then what is the point of earning more. If the top 30% don't see the point then basically a large chunk of our income tax would not be collected. That means no money for nhs.

How is someone on 20k supposed to economize to afford private healthcare? Wouldn't they just die. I dont believe in lower taxes for me but i do think that for people of my income bracket it should be possible to have disposable income and luxuries on a top 30% income without the family help i enjoyed.

Btw household income of 120k and dont have a car either. Can't justify it. No kids.

I always get confused on these threads because people use income before and after tax interchangably and it is never clear what peoples disposable income is. 100k before tax and 100k after tax are very different amounts of money. That 100k could be across two incomes too.

We are about 60k after tax and we are ok. We have definitely felt the COL crisis, but not as badly as others as we don't have anything on credit. We are family of 4 in a 2 bed flat. We live fairly frugally and can save. We are going on holiday in the UK and don't spend a lot on clothes or days out, but this means if an appliance goes wrong we can replace it when we need to and can build up savings. I prefer to have that security rather than being extravagant, but that's just us. I think if we were still paying childcare fees it would be very hard. Childcare fees are a killer financially, but people forget this.

@Updownleftandright they also do not declare how much they are paying into pension or if it just statutory ,minimum.

This.

We have a joint household income of around £70K (gross, i.e. before tax). Whilst we aren't exactly living the high life, we are perfectly comfortably off, despite supporting one at university with the youngest also about to start in September. And we live down south (although not London/South East). What is everyone else doing with their money?

I wholeheartedly agree.

Nursery fees.

There's going to be enormous variations in housing costs depending on age as well. You bought 20 years ago, presumably your mortgage will be significantly smaller than if you bought yesterday (or you'll have a much bigger house).

As others have said outgoings and where you have chosen to live make a huge difference. I live in a Scottish city and the area you choose to live will have a massive impact on your outgoings. In some areas of the city you can get a two bed flat for offers over £100,000 and in other parts of the city the same flat will cost you offers over £420,000. We offered £50,000 over the offers over for our flat in 2017 and the difference between our bid and the next highest was just £500. If you were to rent our small 2 bed flat now it would set you back £1100 a month. Is it any wonder some people are struggling when rent and mortgages are increasing well beyond what even people who planned for an increase may have planned for.

Yes that's true. It's very hard to compare. I pay over £250 into a pension each month, so if that income is included it is higher.

I will add that I think things are really crap at the moment unless you are very wealthy. If the COL was going on 10 years ago I'd be screwed. I do see people's points in these articles. People have worked hard to have a certain lifestyle and their standard of living is falling, and even worse, we have 14 million living in poverty (IIRC) and most of these people are employed. That's really shit and shouldn't be happening. A lot of people are not extravagant, the basics are just much more expensive. I think it's reasonable to expect to go to work and not be cold and hungry.

This.

My household income is also around £70k gross and there is no way that I could afford nursery fees on top of my mortgage (on a 2 bed flat, not anything extravagant), bills and commuting costs (can’t afford to live near work)

Who said, that this equates to 'struggling' why should we be 'struggling', does this help anyone least of all people on lower incomes than us. We worked hard at school, uni, post grad, qualifying to become an Architect, what is the point if housing is seen as a luxury item now! It's all very well wishing for the demise of people that are MC but that also sees the demise of their spending power, how exactly is this going to be beneficial for the economy?

I've always been poor, was a sing le mum whose ex managed wriggle out of paying any child support and life really has been quite a struggle. I have managed to pay off the mortgage on a small inner city terrace in a bad area that is getting worse every year. I have never been able to afford a car and have had about 15 holidays in the past 30 years. I still think I am fortunate compared to many. I am retired now with the state pension and a small NHS pension. Was managing til all the COL stuff kicked off and am now having to be very careful, but as I have been skint for most of my adult life I am quite good at managing . My savings are small and they are being eroded as I am now having to dip into them for day to day expenses. I still have a better life than many, no housing expenses and no debts and I can have the occasional treat, However £120k is incomprehensible to me, I don't even know anybody who has that amount of income, and I do wonder what these people do for a job. My friends who still work are nurses, teachers, support workers, housing staff and will never ever have incomes like that. It is another world.

Well, yes, nursery fees aren't a new concept. I too had nursery fees to pay back in the day and I earned considerably less then.

This.

You don't have to be "struggling" to be annoyed that the price of everything has gone sky high and customer service / public services are rock bottom

I resent paying my hard earned money on lots of things now that are such poor value

Debt Is Not Kool.

It’s difficult as well as things like a takeaway/ meal out/ trip to the zoo/ holiday are luxuries but at the same time if you are working hard it is important to have time to relax and what is what is the point in putting in so much effort if you can’t also enjoy yourself a bit. So I think saying you are struggling as you can’t afford a holiday is fair enough.

also cars, I need my car to be able to work. There is no way I could do it on public transport and fit in with nursery hours. Yes, I could have a cheaper car but I also don’t have one that is too extravagant and if you are in it for a large number of hours each week just to be able to go to work a certain level of comfort should be expected.

Who said housing was seen as a luxury? Your posts are baffling me.

House prices are currently 8.8 times the average earnings, more than doubling since the 1970s- the last time housing was this unaffordable was in the Victorian era. You can peddle the myth that is down to extravagances but it is a complete fallacy (as I'm sure you probably know).

My advice to women only on £100k is try to get up to £200k or more if you can (not of course possible for many). We have the highest tax burden for 70 years and plenty of people are working a lot less as 47% upper rate of tax/ NI and then adding on 9% student loan tax and then not getting child benefit, not getting the 30 free hours, not getting the single person tax allowance means there is a bracket of middle class professionals (and indeed where some people lower down are coming off benefits) when work hardly pays so people work less. We have very low productivity and a very very very high tax big state Tory (and Labour) parties.

People should look at net not gross pay and then remember it can be £60k a year out of already taxed income for full time childcare for 2 babies in London because of Big State which has heaped cost on cost to full time working mothers.

Someone saysin £120k is unbelievable. It is £6200 a month. Take off £5k a month for full time childcare for 2 babies and this unbelievably high sum is £1200 a month. If childcare were one child on say £24k in a London nurser y that instead leaves £4200. Out of that take £750 a month student loan repayment. Leavs £3450. Say London rent is 2k a month and our very very rich £120k a year single parent working full time is left with £1450 a month for her travel costs, work clothes, food, council tax etc so this massive £120k because of the way the state takes money from hard workers ends up after rent and childcare etc only £1450. Is £120k really very rich in that case?

The person didn't say that. The chip on your shoulder is weighing you down.

If you'd do anything for £60k+ salary, why don't you?

We have not had a normal "rate cycle" since they started experimenting with QE, I wouldn`t bet on a turnaround on rates unless we go into seriously choppy waters (Apple etc. sales to China starting to look shaky today, a sign maybe?) You are right though, the dafter and more reckless the previous debt decisions the more financial pain people will experience.

@LondonPapa and what makes you think I'm not working towards this already? Nice bit of judgement there.