'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.

Expectations vs reality is right, but you’re comparing the wrong things.

The equivalent of a £120k salary 20 or even 10 years ago would have bought you an enviable lifestyle - a nice house, car, money for holidays, private school for 2 kids. Now, it doesn’t.

The cost of housing, childcare, energy and consumer bills have risen out of proportion to salaries. Your post implies that people are greedy for wanting a good lifestyle, but they just want what the people in the generation above them have, having worked every bit as hard and done exactly as well.

we definitely need the low earners but we need higher earners and average earners to pay for the welfare state- free healthcare and state education that we all use. the IFS stats are this- the top 30% pay 90% of tax revenue in the UK.
the scandi and european countries do not tax higher earners much more than we do but they do tax average earners more. Unfortunately we can't tax average earners here as they earn so little relative to cost of living that they would be on their arses if they do. So ideally we all need to earn more, esp average earners.

Everyone deserves free healthcare but ultimately how does society pay for it? By taxing people who are better off and can afford to pay. the more people there are who fit that description, the better.

You guys understand the premise that people spend according to heir incomes right? Then a huge spike on these expenses in a short period of time , including ones that are not easily adjusted (like mortgage payments rocketing) and no relative increase on wages will cause people struggling regarding of a seemingly high income.

@Justanotherlurker We lost money when we sold our house in the nineties. But house prices then used to go up and down.

This.

No one has to keep up with The Jones' or compete in silly who has the best car, holidays, clothing games.

It's choice. I think less of people who feel the need to do this. Be yourself, be different.

And I do get that nursery fees are shit. I spent 3 years spending more on childcare than I was earning. We were literally paying for me to go to work for 3 years. But I knew long term for my career it would be worth it. Being a parent to young kids is financially hard, struggling with kids that age is not new. But hopefully it will improve as they get older.

Yes, good news though as house prices should start coming down at a faster pace.

@Moreorlessmentallystable I have never lived like that. As soon as I was out of having only enough to feed and clothe us, I saved for rainy days. And they have happened more than once. Now is a rainy day.

sorry I meant to put that in a separate reply... my apologies. got confused with the posts

Who said we are unique - please explain the 'number of reasons' for those of us who are economically illiterate?

Assets and capital are real middle class guarantees of wealth. Drawing a salary is not wealth
This

Not what I'm saying at all, I said I do have luxuries and I don't want to give them up. PP referred to this as 'over-used to luxuries' where I see it as just wanting the standard of living I've earned. I'm not whinging that 'waaah I'd love to earn 100k, I'd do anything!'. In fact I'm actively on here saying that those who earn more than me should have a better standard of living than me. The issue is that it's not always the case.

The opinion people regarding benefits always makes me eye roll
the constant well I know this person who can afford a holiday we earn 100k and can not afford one 🙄😂

I am a middle earner who went on to universal Credits for 2 years due to circumstances and now back on a higher wage than i was before UC.

on universal credits after housing costs no other bills etc had 485.00 including child benefit to survive the month.

back oh my middle warning wage and one extra child in kid even the slightest bit pinched. It was a big dose of reality for myself and actually thankful for that period of time because it taught me more about budgeting and what was important.

The more you earn the more you pay back each month.
The period of time students are required to pay back is now 40years, it used to be 25 years. If it’s not all paid back once that is reached then it is written off.

Many people will never pay the whole amount back especially if you are a lower earner, you take a break from the workforce or you die.

Also once you reach age 65 ( not sure if that’s increased in line with retirement ages) anything not paid back is also written off.

If, for example, a 62yr old decides to do a degree they can get a student loan but obviously as they will be 65 on completion they will never pay anything back.

But I think it must be greed. Because if you are able to earn that amount of money you are still in the top threshold of earners. So professional, educated and should be financially aware enough to realize that the salary you are earning does not buy you the luxury lifestyle you are hoping for, and make adjustments. Yes its the fault of the COL crisis that you cannot live the lifestyle you think your income can buy, but it is down the individual to cut their cloth according to their earnings, not carry on regardless and you CAN live well on that income if you manage it well.

To be honest I can see how those at the lower end (around 60K) could be struggling if they have high housing costs, high childcare costs of high commuting costs. We have a good income at around 95K, we’re not struggling by any means (far from it) but we’re also not living the high life either. I’m going back to work full time soon so that we have more disposable income. Everything is so expensive now.

I think many people end up seriously falling victim to "lifestyle creep/inflation" whenever their salary rises, without taking into account what might happen if, for example, their partner lost their job, or the cost of living rose exponentially.

We fall just within the income range mentioned in the article... but we don't struggle. We live in an expensive town but we purposely bought a house that we could still afford on one income or if inflation rose by several percent (ex-council house) and we have a small car, etc.

It can be hard to go against the grain when everyone around you is getting the biggest mortgage possible and driving an SUV.

These threads are quite difficult as you can literally only relate to your own finances.

We do have a lot of savings, mainly because we choose to spend quite frugally on most stuff but also we both work in sectors where redundancy is common and so need to prepare for it. We have both been made redundant twice - when you go through this, you realise how important it is to have a certain amount of months cover to find a new role.

We live in the south east, have 2 secondhand cars. We go abroad on holiday every 2 years at the moment. We are definitely having less meals out

Can I start?

1. Cheap debt.

I would say a lot moved into houses they could comfortably afford, rather than 'barely', however with interest rates shooting up which caused higher mortgages, higher council tax, gas & electric, childcare, food etc. with wages not increasing to keep up, then the middle becomes particularly squeezed.

We're fortunate to live in the north on combined just over 100k, (unfortunately as 'DINKY' but been TTC for a while now) - so aren't too worried, but couldn't imagine trying to live in the south right now.

I agree high earners should be taxed more.

But I don't think demonising those who earn a low wage as if they are lazy or not trying hard enough is going to help nor an acceptable way to go about increasing the number of people on high wages.

That's called snobbery and is blame shifting onto some of the poorest and hardest working.

Well sure but then your banker friends have two options. Either

1. They win a big M&A project and get le beaucoup bonus; or
2. They reduce their expenditure to fit their 'straitened' circumstances. No one gets jailed or killed because they withdraw their kid from private school or stop little Isobel's horse riding lessons.

I think there's another cultural issue with the middle class which is that they expect their lifestyle and earnings to always be on an upwards trend. They think that upwards trend consistitutes 'normal' and 'fair'. Other social classes in this and other countries know that life in fact shifts up and down and you have to tighten or loosen your belt accordingly. Wheel of fortune, sometimes you're up sometimes you're down.

I think the middle classes got their incorrect belief about normal life always being on the up from the boomer generation. Either way, it's a false assumption.

I agree with these points

We do need all ranges of jobs to function but the tax burden is maxed for many imo

Sorry, but it’s not greed to feel aggrieved that in this day and age the top 1% of earners in this country cannot afford what historically would have been available to the top 40% of earners.

It is a sign that something has gone really badly wrong with our economy and our country.

And if it is this shit for the top 1% can you even imagine how bad it is for the bottom 1%. That’s what we should be concerned about.

They are struggling because they lack financial education and have no idea how to manage money. They live above their means by buying houses they can't afford and financing cars they can't afford and eating out too much.

Yes, I'm a millennial living in the South who used to be one of these people until I gained some financial literacy.

We recently spoke to a mortgage broker who told us we could afford a house for a million pounds. Lol, no we can't. Absolutely no way we'd go for that. That's a huge amount of debt. But many of our friends on similar incomes live in such million pound houses. Hence the stress.

It's just about being realistic and living below your means.