'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.

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.

If you could (technically) afford a million pound house, there’s scope to buy something cheaper, though. Not so much when you’re on £60k and the cheapest property that meets your needs is £315k.

@CantDealwithChristmas ,

Yes, that is kind of what I was saying. I agree with you.

As I said, there is a ‘survival’ minimum amount and then everyone sets their personal idea of what their base is.

It is very easy to build lifestyle up, far harder to make cuts. People get very emotional over their home, school fees etc and, when you are used to a 4 or 5 bed house with a big garden, it is depressing to trade down and people are very loathe to clean their own houses or pull their child out of independent school.

There is no real solution except to go back a bit to where people saved for the bad times in the good times and only to buy what they could comfortably afford. But that mentality has kind of disappeared.

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

yep & one reason social mobility is going backwards

lots of posts along the same lines here....

it isn't about people on good incomes not managing their money well, and nobody said struggling.

Everyone has had significant increases in our costs, regardless of income that will have an effect. Even if you have a lot leftover going into savings or investments, a £700 increase in mortgage and £100 increase in heating and fuel a month alone, will impact what you spend on unnecessary items. Thats what the discussion is about, not about whether its manageable, but what is impacted and by how much.

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.

It’s the same old tropes 🙄

If you could (technically) afford a million pound house, there’s scope to buy something cheaper, though. Not so much when you’re on £60k and the cheapest property that meets your needs is £315k.

And is still cheaper then renting

There is no real solution except to go back a bit to where people saved for the bad times in the good times and only to buy what they could comfortably afford.

What this article is about though, is that those that were comfortable before with certain luxuries or non essentials, are no longer feeling comfortable with those things. It doesn't mean they can't adapt to it, the issue is money isn't going as far as it was and the kind of incomes that were once in the high income bracket, don't cover the luxuries expected.

Living in the South, I'm intrigued to know where all these £400k 4 bed houses within a commutable distance to London are?

Surely the point of all this is that most of us, low, middle and high earners, are feeling the pressure of the cost of living crisis, wage stagnation, taxation system etc. Other countries have done more to support their populations e.g. meaningful energy caps - perhaps we should be demanding more action from our government.

5 bed house? school fees? cars?

We are on £120k and have a small 2 bed flat and no car. DH bikes to work cos in his words, tfl fares are too high. And we had help to buy our flat albeit through rent free living.

Maybe you mean £120k per person.

The title of the thread says 'struggling', so I'm not sure what you're talking about.

'Unnecessary' is the keyword here.

The problem is too many people live how they feel they should be living, rather than living within their actual means.

Also posters keep ignoring the fact we have shit wages

Hilarious!

DH's job is pretty dependent upon him being financially literate, he creates and controls development budgets, construction costs for huge profits in a big Architect'a practice. Do you think he doesn't apply that to our family budget!

They're in 2005 🤣

@SoloMumming very accurately sums up the key problem with the system & why productivity in the U.K. is and continues to be so poor! Not about people being lazy in many cases but a very poorly thought out system!

I'm on a good income, but in London that doesn't stretch that far. I still live in a flat share, with one other person.
If I were to live on my own in the area I am currently in, I'd have to spend half my salary on rent, bills on top, travel on top which would leave me with enough to survive but no money for any contingencies or even little treats like a coffee out.
My landlord wants to sell and asked if I wanted to buy, but even with the deposit together, I would not get a mortgage that high.

So in light of all of that I will be returning to my home country in September, after 15 years in the UK.
Things have got more expensive there, too. But on a similar income to what I earn now I will have more spare time, much lower rents, affordable public transport and lower COL overall.

dunno, i was looking in the home counties and i realized that 400k would buy me a 2 bed terraced 54 sq metres house like this one in Hitchin. So no point moving away from family who could perhaps help with childcare even occassionally.

https://www.rightmove.co.uk/properties/143513966#/floorplan?activePlan=1&channel=RES_BUY

My teeny 2 bed flat in zone 3 north london is bigger because there is no staircase. and DH can bike to work. so really commuting only costs £150 per month for both of us as opposed to nearly £800 in hitchin for both of us.

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.

The real high earners aren’t on PAYE which is part of the problem

Not necessarily. We are currently renting despite having a healthy deposit saved. With interest rates at 5%, it's working out cheaper for us.

There’s also a massive difference between 60k and 120k. You can’t really compare the two incomes.

Yes I fully get that and there is a lot of very compelling research for example by Ariely & Thaler about how much more difficult, literally painful, people find it to 'cut back' on big things once they have factored them into their lifestyle and percieve them as the new normal.

But the fact remains that the middle / upper middle classes have had an extraordinarily good run since the mid 90s (or indeed the late 60s depending on your viewpoint) and so think that a life of ever increasing comfort is the norm. It is not.

you're right, apologies, the general discussion here wasn't using that word. Also they're saying the income families struggle on is £60,000, within the article. Thats different from £100,000, and there is just one example in the article of someone on that, and they definitely have less than what you'd expect. The headline is a bit clickbait.

The problem is too many people live how they feel they should be living, rather than living within their actual means.

But costs have gone up dramatically, thats the point of the article. Do you think we should just keep adjusting when our wages aren't increasing along with increasing costs of living? It doesn't make much sense what you've said. Costs have increased so much that previously wealthy people can no longer feel as comfortable and don't have the same money to spend- which impacts us all even more. People have less and need to spend less, and that is actually going to have an effect on an already struggling economy. It actually really isn't about people spending too much at all, the article is obviously about the increases in costs, and how that impacts the middle class.

The 400k houses are in slightly shoddy areas, with maybe a 20 minute walk to the train station, in zone 5/6.

Being in finance does not mean you can budget. DH is in finance and while he manages tens of millions for his company, I'm much more savvy when it comes to general household money saving and budgeting (I'm not in finance).

Police officers break the law. Doctors eat unhealthily. So your logic makes no sense.

They'd still be earning over double the rest of us mere mortals, so I still wouldn't give a flying fuck about their whining.

Advance purchase tickets don't work at peak times... my train ticket to get to work costs £50. For a 50 minute journey (which is always longer due to the congestion). If I travel outside of peak times then it literally halves but I have to be in a 9am meeting which means that I have to be on a 7am so I have to pay the big bucks. I have to be in the office 2-3 times a week so that really adds up.