'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.

But the question is why should people live frugally? Does life have to be struggle - bad weather, no fancy holidays, no eating out. What do people do if they don't have kids. Just live like machines with office to home with no pleasures in life because they have to make a choce between saving for future or a little pleasure in life, and get depressed. UK is no Spain where you can just go to the beach with some bread and wine or even a local plaza and have fun for very little money.
I think people in the UK should demand more from their employers.

OP i am so sorry for your fertility issues i wouldnt wish it on anyone.

In my road of 9 houses, only three are mortgaged the rest have been owned outright for years, i am in the south east. A third of properties are owned outright in the Uk i think. There is a lot of inheritance and wealth flying about in this country.

I never said I was personally struggling ☺️ I was merely explaining how can people struggle on those salaries for those that didn't think it was possible, just because they have an income of 20k...

Obviously I’m basing prices on what my neighbours houses have sold recently for…

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.

Of course people are worse off but I don’t think that should mean you aren’t annoyed that you’ve lost money on your flat.

So I’m on north east coast and that’s true for the nice bits here now. 10 years ago it was lots cheaper. My friend has family here and it’s still a lot more affordable. The primary school is nice, village centre is pleasant, nearby town bit naff but has the big supermarkets, couple of decent places to eat and a nice small theatre plus the secondary school is decent, fairly new and has good facilities. North west is more expensive

https://www.rightmove.co.uk/properties/140917730

I’m on 63k but single income, 3 kids but only 1 under 18, but 1 at Uni needing some support with food from me (his dad finds accommodation and fee’s). I am renting, finally have a deposit after living in ex’s house for 3yrs when he lived overseas but can only afford a small 2 bed flat (I’m renting a 2 bed flat) so decided to wait 2.5yrs until DD goes to Uni and I’m going back north. Means I’ll be almost 50 starting a mortgage. 63k for me after tax and pension etc is £3500 a month, with rent of £1400 that’s comfortable but far from well off and as I say I’m living in a 2 bed flat so sleeping on a sofa bed in Uni hols. It’s far from luxurious. Just paid a nice tax bill too from before my recent promotion when I had child benefit still so had to repay that.

Indeed @Heatpumphero

Capital gains have almost tripled over the last decade to £65bn. Despite this most people never receive any capital gains with less than 3% of adults paying capital gains tax over a ten-year period.

in 2020 more than half of all taxable gains went to just 5,000 people. Who received an average of over £6.8m per person in gains.

more gains in the parliamentary constituency of Kensington than all of Wales. One neighbourhood in Kensington comprising just 6400 people had mire gains than Liverpool, Manchester and Newcastle combined.

There is a lot of inheritance and wealth flying about in this country.

My in-laws house was 60k in the 80s about 1.8m now. Similar story for my parents. I think 1 in 5 pensioners is a millionaire when you look at houses & pensions. There is huge intergenerational inequality & it’s becoming more about what & when you can inherit vs what you can earn which is regressive.

Yes but your 49, this is at the end of the windfall from London housing. You didn't really do much that is radical. I have older siblings that did the same and the difference of being 6/7 years younger is all it is.

Yes @underthebun - imo in London that’s what has the biggest impact on disposable income. Unless you were lucky enough to benefit from family help
or bought your property decades ago you are basically screwed by the property market.

It’s a little galling to be preached at for making bad “choices” or being told to “cut your cloth” by people who were just right place time and/or borrowed from the BOMAD.

Yes it is a first world problem but I get paid a ridiculous amount of money and work ridiculously long hours. I pay close to £100k in tax per year. My 3 bed terrace cost £750k and my mortgage is huge. I had no family help at any point. I have a whopping childcare bill as I work full time. My neighbour lives in an identical house but she bought it 10 years before me for £200k (deposit gifted by parents) so is now mortgage free. She works 3 days per week and is paid a fraction of my salary but has significantly more disposable income because she has no mortgage and hardly any childcare costs.

From the outside I am the “successful” one - I got a double first from Oxbridge and am senior in my high paid job - but my life and my whole family’s lives are much less comfortable and more stressful than my neighbours’.

From Watford it’s between £3100 to £3900 / yr.
but the rent saving given PPs previous comment would fill that loss very quickly with a minimum saving on rent (for a 3bed ) of £1000pm.

I’m tempted to move to County Durham where I’ve seen terraces for 50k or under. Could mean I could buy outright! Tempted to persuade DD to go to Durham Uni and I’ll live nearby for 3yrs and save what I’d spend on rent, then sell up and head to native North west. I’m priced out of the south east and always have been but I came here 22yrs ago for work and then ended up stuck here after breakdown of relationship so kids could be close to dad and better schooling. 2.5yrs and I’m free!

The only property in either of those locations within that budget is a listing that hasn't been updated since August (in other words, not available). You need to move significantly further out, which means more money on the commute.

The article says Lillian from county durham is experiencing financial difficulty despite a combined income of £70k.her doer upper means £25k repairs. She is 36 years old but has no savings other than pensions.. Living on paycheck to paycheck.

It seems nowhere is safe!

Well, I'm a doctor and when I was in training the consultant cardiologists I worked for would notoriously go out the back and smoke in between angiograms.

Yes, you might have more knowledge. It doesn't mean you implement it well and use it to your advantage.

So saying hubby does x,y or z and therefore must be good at budgeting is untrue. It's just a sweeping assumption that might be part of the problem.

@harrietm87 I agree with you. I don’t earn anything like you (combined low 6 figs) but I work 3 days a week. My home is worth similar to you but I didn’t buy it for that. The most I paid in childcare was £600 a month as family helped & I wasn’t f/t. Earnings are only part of the picture.

Just had a look at my costs compared with three years ago when we got a mortgage, fixed for another 2 years as yet. Including mortgage, we needed £4000/month to live on then. For the same things, it now costs us £5000/month. Bills are up £500 and food shop/sundries also up £500. We have each had small pay rises (around £500/year each) which have helped, but we’re in a worse position now than we were in 2021. We’re not even standing still, we’re actually going backwards!

@harrietm87 I am a low earner and also received no help from family i.e. since I was 18 I paid for everything myself or with my husband. Everything.
Those who receive inheritances will always have a head start, it is how it works.

This! My income has gone up 15k since covid (teacher so went up pay scale and got promotions) but after pension contributions I only earn a few hundred more a month and this has all gone on the extra bills and general price increases like food and the mortgage. I feel very fortunate not to be in dire straits, but I would be without the pay rises and promotion and don’t really feel the benefit of them they have just helped me keep afloat rather than improving my lifestyle.

It’s not (solely) about inheritances though, it’s about the massive increase in property prices over a very short period of time. It’s created a massive gulf between those who bought property in the 90s and earlier (all now millionaires) and everyone else.

It’s not right as it means that your earnings are essentially irrelevant.

UK is 6th largest conomy in the world, but this is still acceptable. You should have some basic luxuries in life when you live in a developed country - more than Freeview TV. But politicians in the country are so privileged and corrupt, and want you to be grateful that you are at least surviving. Where is the plan to create jobs, investment in technology, better energy sources, making the country attractive for big companies to invest in the economy. Politicians do nothing and we don't hold them accountable.

If you're paying close to 100k in tax, how on earth can you be struggling to pay a 750 k mortgage?

Agree…we fall into the income bracket and I consider us ‘doing well’ that we have a holiday abroad most years. I do think people have got used to multiple holidays/weekends away, help around the house (its £15-20 an hour for a cleaner where I live so you need to be earning alot to justify that) and just generally feel hard done by if they cant have beauty appointments/spa days/tons of meals out etc. Now that people are paying more for their mortgages/COL crisis, perhaps they have to learn the lifestyle they had wasn’t really that normal middle class.

I have my hair done every few months (no other treatments), a spa is a rare treat (hen do etc) and we clean our own home around work. I wonder if the people whinging in that bracket are really living a middle class lifestyle or trying to aspire to a life they really cant afford.

Our income is around 24k a year. Currently claiming no benefits because our savings are too high to be worth bothering because we need a new roof that we've been saving for and can't get a loan because we don't have enough spare income to pay it back. When the roof is sorted - and our savings almost completely wiped out - we're going to have to see if we're eligible for UC.

We are lucky in that we have no housing costs. Unlucky in that DH is incredibly restricted in the work he can do because of DS who's autistic and so is essentially self employed and earning a pittance - we're waiting for a decision on DLA for DS. I don't know how much we'd be paying now if we still had a mortgage - it was around £350 5 years ago, but our income was 33k then.

Those who receive inheritances will always have a head start, it is how it works.

No, work should pay

”The Resolution Foundation calculated that had wages continued to grow as they were before the financial crash of 2008, the average worker would make £11,000 more per year than they do now, taking rising prices into account.”

“In fact, what are known as "real wages" haven't seen sustained growth for 15 years”