'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.

In Yorkshire we paid under 200k for a 3 bed semi, large garden, within walking distance of good primary and secondary schools. Not as cheap as 100k... but not 300k for a terrace!

I earn under 20k and have cut all luxuries. Not that I had many.
Basic cheapest broadband
Freeview tv, no packages
No nights out
no holidays/ weekends away
no gym membership.

The middle earners seem to still have these things. I get the expectation of earning that and what it could buy in terms of lifestyle but it’s not possible rn.

i used to be able to cope with emergency costs or maybe a holiday every 5 years but no longer.

I am the same than you, but I am aware others are not, so I can easily understand why some people will struggle in high incomes when prices increase so rapidly

@Redcar78 I can believe it. Also a lot is luck, I fixed last year on 2.4% for 5 yrs, friends whose fix is ending now aren’t more financially illiterate.

OK. I'm 49. Mortgage was paid off at 42 mix of lucky in housing market, but were partly made our own luck as we moved form high cost zone 2 west London, to low cost East London suburbs for more affordable housing. Our current joint income is approx £75k, and has barely changed for the last ten years!

Holidayed every other year in 20's to over pay mortgage. Had kids in thirties and 'holidays' generally consisted of staying with close family until things evened out. Didn't eat out much.

Kids now early teens so no child care costs. And obviously we paid off the mortgage. We now do relatively cheap abroad holidays (we're able to save around £4k a year to do this. Booking a cheap 3* hotel but in a nice area gets us a 10 day holiday. £2.5k for hotel, cheap flights and then the rest for food, drinks and excursions). Kids have hobbies that aren't the cheapest, so we tend to save towards that too. I use Hello Fresh, but our household weekly spending has actually gone down by using them as no longer tempted by random crap in the supermarket. Don't have any loans or credit cards, but then, also don't have any real emergency savings either!

The big difference between us and friends is the mortgage. We bought a smaller, cheap house. We don't have an extension, or fancy home office in the garden, and so we haven't mortgaged to the max to get bigger and fancier. It's not perfect, but it does. And did we want to move to east London suburbs? Hell no. But financially it was our only real option.

But for me that would be 6-8 hours of driving to help care for my mother once a week. How much would that on in petrol alone. We don't all have the option of living at the other end of the country to our families.

We earn around £120k between us and are very comfortable. SW city. We live frugally in many ways - one old car, went for the local slightly dodgy comp over private, never waste money but happy to spend on things that we deem important - but the main thing that helped is now is building a life on one salary, adding a second when kids were young BUT maintaining the one salary financial commitments.

so no bigger house, no second car, no fancy holidays. We saved and paid down the mortgage so now, despite rate hikes, it’s totally manageable and we can afford to absorb the food and fuel increases

yes, childcare and housing is expensive but people also need to take responsibility for their choices. Both can be true.

OK. I'm 49. Mortgage was paid off at 42 mix of lucky in housing market, but were partly made our own luck as we moved form high cost zone 2 west London, to low cost East London suburbs for more affordable housing.

Moving outwards is hardly revolutionary. I made 200k on my flat in 2 yrs when I moved further out for a house. It wasn’t anything I did.

£120k is about £6k take home a month (after statutory minimum pension amount and taxes and NI).

Rent for a 3 bed house can be about £2500/£3000 a month in zone 4.

Each child costs about £1000 a month for nursery, some discount for the second so say £1800 a month for full time nursery.

Then say another £500 for bills council tax etc. then you're left with £700 a month for car and food and savings etc.

The money vanishes!

When you compare the salaries to other developed countries, UK salaries are lower. So for someone earning 120k in the UK, their peers in US or Switzerland or Singapore, Luxembourg or even Germany will be earning higher or have more disposable income, pension, so those people will always complain but if you compare a salary of 120k with 30k, 120k will look very high. But earning 120k means you are in a corporate, high flying career and travel for work or have some exposure to your counterparts globally and very soon you realise how poor you are compared to those with similar qualifications and experience.
Why don't people in UK demand better salaries, rather than criticising others for saying their salaries are not enough.
Same company will pay less for the same job in the UK versus USA because UK salary bands are lower.

Just out of interest, how much was your house, when did you buy it, and did you have family help to pay the deposit? And how much would it cost to buy it today?

The answers to those questions will explain why you find it easy to manage on your income.

You think that people are struggling because of choices that they have made, but you have almost certainly benefited from hand outs and/or historically low interest rates and/or lower property prices. Not having those things is not a “choice”.

This thread is just looking at earnings. Not wealth. It’s like that chap on question time a few years back who was lambasted cause he said he didn’t feel rich and he was on £85k. Those that are wealthy don’t have mortgages, they have inherited wealth. It’s those we ought to be taxing more heavily, not the country’s workers.

If you’re looking Watford or Harrow ( for example ) are very commutable and within that price range….just.
Also on the underground

Are you the CrashyTime who used to spend hours of their life in the 2010s on the Martin Lewis forum telling people not to buy because house prices were about to crash? Happily I ignored your words of wisdom, bought in 2013 (2 bed in London zone 4, deposit from years of savings) and paid my mortgage off last year (single earner, no kids, university admin job).

@harrietm87 Im a millennial & yes I have a 2nd hand old car & don’t holiday abroad etc but the biggest impact to my disposable income now is the fact I could live at home & pay cheap rent so I could save & was also given a large cash gift to get on the ladder.

Those that are wealthy don’t have mortgages, they have inherited wealth. It’s those we ought to be taxing more heavily, not the country’s workers.

yep

Yes, for 8 years. And Central, Central London (which I suspect is less desirable than some of the suburbs after the pandemic). I know, it's shocking- we were shocked how little we would be able to sell it for- we'd make almost nothing after all the repairs we've done- which is why we are currently renting it out. Btw the price they quote on websites like on the market is not likely what you'll get, thanks to the interest rates putting off buyers.

I'm not saying it doesn't suck. It would be amazing to sell at a good profit and have that much more to spend and save. But I'm just very aware of people who are so much worse off. With our income we can still live well enough and sleep through the night without worrying about how we're going to make rent or pay our bills.

there is no small cheap house anymore. I had a budget of 400k when i was 27, i could buy a 2 bed flat in zone 3 nw london near family or a 2 bed terraced house (same size as flat in square footage but with staircase) in places like Hitchin or orpington or 2 bed terraced in East London (or a flat).

I chose to be near family .

A share of freehold 2 bed maisonette cost £300k in Harrow at that time, but its also zone 5.

Now I have overpaid and could theoretically afford to move but want to budget for childcare fees of £2k per month comfortably plus have some safety buffer. So I am still looking at flats in my area which are bigger in places like Pinner and wondering if the cheaper price tag is worth losing childcare help from MIL. Probably not so perhaps we could have the baby here and move when the baby is a year old (assuming we can conceive naturally). We could then get the bigger flat in our area then without borrowing too much.

Its all a bit of a dance and i don't know how people who earn less cope unless they have a lot of help.

But if you move further out of London but still within a very commutable distance your money will go further.
In your scenario Its all about choices.

But your saying you are only not struggling due to savings and not your salary?

commuting is at least £400 per person. £800 in total for a couple.

It was cheaper for me to stay in london in a 2 bed flat vs a 2 bed terraced in the home counties. Plus no need to run a car in zone 3 london.

Until a lot of professions lose the ridiculous London centric attitude to training etc there will always be people on good incomes who struggle.

Assume doctor, lawyer with an interest in city commercial, civil servant, all very much traditionally middle class professions. Unless you are from London (or close commuter belt) you will probably need to move to be a city lawyer (Manchester and Bristol not massively cheaper) rather than live at home. I'm from the edge of the commuter belt and would have saved very little by commuting because of the cost of the season ticket Vs cost of a flat share. Doctors just move wherever they're sent by the deanery they get employed by ...

Then having settled into your profession you have children, middle class professions often have longer hours and fitting childcare and working hours together can be a problem in less traditional commuter belt locations - less "commuter" locations will finish earlier than the first train from local city after 5pm... Fine if you WFH but not all do, so you have to balance location with childcare availability / extra bedroom for live in childcare / parents coming to stay to cover occasional diary clashes.

So it's easy to see how someone with 2 kids, limited WFH options and no free childcare network might well be struggling.

Even easier to see how a couple of doctors battling NHS shift allocations might need a nanny and therefore a bigger house plus car each to actually get to work at shift times, while having what is on paper a good salary. Add in the inevitable lack of stability of location in early professional years and you have a problem ..

Easier if your parents can subsidise your early professional years, limit student debt which takes a chunk of the headline income but should middle class jobs be limited to upper middle class families for ever leaving those who have to self fund fewer options?

He's not in finance, he is an Associate Director/Architect, it absolutely does mean he can budget, it is literally his job to manage budgets and costs! So isn't the reverse just as likely if not more likely, that people's professional knowledge does inform personal decisions. My DH's uncle is a Doctor, he is always using his medical knowledge to help his family. Property developers will make decisions about their own property based upon their business knowledge. I use my knowledge of Info security for my personal systems. I think using this to your advantage is far more likely than self sabotage!

Single, don't receive any benefits
No DC as can't afford them hence no benefits
Take home between £1600-1700pm

I can't speak for that area but it depends what the size and condition of the property was and whether it was in the nicer part of town or not.