'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.

Interesting. I don’t interpret the word ‘frugally ‘ as denoting negativity or a lack of fun and enjoyment in life. I am very content and find joy somewhere everyday, despite the challenges that life inevitably throws.

Chasing happiness through spending is a fools game. There is great value in simplicity. but I feel this is rather off topic!

MP wages have gone up significantly… They voted for that to happen. Shocker.

@underthebun I know wages have fallen in real terms. And inheritances should not give people a large head start in life, but they do. I believe in proper inheritance tax.

I didn’t say I was struggling, I said my mortgage is massive (it is, and will be even more when my fix ends) and that my disposable income is significantly less than my neighbour’s (it is).

As a matter of fact I have “cut my cloth” as I could have afforded a bigger house (I live in a modest 3 bed terrace in zone 3) but chose not to do that in case interest rates rose. However, as I posted earlier in the thread, when my boss was at my stage in his career he owned a 4 storey Georgian townhouse in zone 2 outright.

I think you're clutching at straws with your dodgy analogies, It is literally his job, I live with him, I know what he is like with money!

I'm too old to be in the house price/childcare trap but I can really see the issue. When DH and I bought our first house in 1990 we were on the equivalent of a civil service EO salary so about £12k each. We were able to buy the MC "dream" of a 3 bed semi with a decent garden for £78k so 3.5 times salary. The equivalent salary now is about £29K and the equivalent house £475K. So the salary has increased 2.5 times and the house 6x. That's salary stagnation and house price inflation joining together to make the house 8x joint salary. Totally unaffordable even before you look at childcare etc.

The other issue is expectation which was pretty clear in the Guardian case study where the comment was "It feels like we’ve done everything we were told to do and yet we’re still struggling,” Scott says.
“I worked hard at university to gain a valuable degree, I job-hopped to drastically increase my salary – but it’s not enough. I’ve considered reducing my pension contribution just so we can have more money.

We were lucky that we did buy in the 90's originally, which meant we were able to move from a 1 bed flat and buy a 3 bed terrace (well, 2 bed plus a room not even big enough for a normal bed!) for less. Ideally we wouldn't have moved so far (in time, if not in miles!) from our friends, or live zone 5.

I was only comparing myself to friends who are the same age and circumstances as us. They mocked us for not buying as big as we could afford, so hoping they understand now!

But also, a very working class upbringing meant I never had the same expectation of holidays as they have. I didn't have that experience when I was younger, and so it's not something I have missed as an adult if that makes sense. They all grew up in middle class (rather than marry into it as I did!), so their expectations are very different from mine.

Dual Income No kids

We bought our first place in London in 1987 for £57,000 it’s now worth £325,000
My parents bought in the London suburbs in 1966 for £4,000 it’s now worth £400,000
We re not all millionaires

I still don't understand how your mortgage can be 'massive' on a 750 k house though.

I find it nuts that people in extremely demanding highly skilled jobs are being expected to cut back on everything in life, and live close to the breadline 'to make ends meet'. My boyfriend are I are young and in this wage bracket and work in the city of London and have a pretty awful quality of life. We haven't been on holiday in years, we have rent up to our teeth - no money for pensions, 15% student loan repayments and no money for fun. We were too young to get on the property ladder, we don't have mummy and daddy's help with deposits etc. and we can't even get a house now because of how high interest is. This isn't true just for us, but also for the majority of young people working in London. None of us have kids... and despite working our arses off and getting to the top in a very short period of time - we are living worse than lots of people who didn't bother at all. The good thing is that we have seen this, and seen the way that this country is penalising hard workers, and have plans to leave. Most young city people that we know are planning to leave the country ASAP and go somewhere hard work is rewarded!

Also just so you know if you are in a top paying job you often have to opt out of the Working Time Regulations, which means you are forced to work all hours under the sun for no overtime payment whatsoever. We are regularly forced to work a 100 hour weeks, in extremely demanding jobs with very little reward.

We had a £150k deposit so borrowed £600k…in what universe is that not a massive mortgage?

I see the benefits brigade are on this thread.
Benefits are very low in this country. If are a low earner and you live in places like London you may get help with rent, but most landlords do not accept housing benefit so you often end up in the crappiest places no one else will touch.
If you have childcare costs you will get help with them.
But loads of people on low wages are entitled to zero benefits or tiny amounts. I remember helping my sister apply and she got £4 a month towards her council tax for her family. All of her well off friends assumed she would get loads.
Benefits have been cut and cut.
So if you are a middle earner, no someone on benefits is not as well as as you are.

Why don't people in UK demand better salaries, rather than criticising others for saying their salaries are not enough.

Why do you think we've seen workers in so many sectors (teachers, university staff, nurses, doctors, etc.) striking over the last year or so?

How well has that actually worked? The government want to introduce measures to stop some sectors having the right to strike for pay and conditions, so how well might that work in the future?

If people don't like others criticising them for thinking that their higher than average salaries are not enough, they would be well advised to stand and support those on much lower salaries.

That would be a monthly repayment of like £4k at current rates (depending on ltv). I'd say that's pretty bloody massive.

Well its all relevant I guess.

I mean, are people arguing for ostentatious spending, "This is not my beautiful house, this is not my beautiful wife!"🙄

But also where do people get their money from if nobody is spending anything?

@TerrifiedOfNoise - exactly that. Standing still or going backwards, despite both working harder than ever full time. Home life is fraught, weekends spent catching up on the house jobs that don’t get done in the week. No cleaner as can’t justify it. I can’t remember the PP’s name, but I am envious of the person who wrote about working 2 days a week and claiming benefits, despite having huge earning potential. So much more free time to actually enjoy life. That said, the flip side must be feeling so limited. Either way, it cannot be right that working doesn’t pay.

Do you mean “relative”?

so just to confirm, to you, a £600k mortgage isn’t massive???

i was mocked for not moving to zone 10000 or outside london and paying rail fares and running a car so i could buy a 3 bed semi with a garden.

Its true i could afford the mortgage but i wasn't too sure about the rail fares and the car. Its almost equivalent to a second mortgage if you add 2 sets of rail fares and the car. Service charges do cost but nowhere near commuting fares! Plus DH is one of the directors of our residents management company so we do have a say.

I have since left that company so i wonder how my ex colleagues are doing.

So much depends on:

1. Whether you own or rent, and if you own when you were first able to buy.
2. Whether you have children, their age(s) and specifically how much childcare you need to pay for.
3. Where you live in the country.
4. Whether you're single or have a partner.

I can well believe that a single parent with 2-year-old twins who works full time in London and has no family support with childcare, and who rents, would probably not feel very comfortable on a salary of 100k.

However, a couple in their 50s with two older teenagers, who bought their home in Newcastle 25 years ago would probably feel extremely comfortable if they both earned 50k.

I'm grateful to be a relatively high earner and thank my lucky stars each day to earn what I do and I enjoy a great quality of life as a result. But I can also see how that would feel very different if I were forking out 4k a month for childcare (a reality for many with 2 little ones) and 2k a month rent for a 2 bed flat. That'd wipe out pretty much my entire salary!

Live in the South, didn't manage to purchase a house until much later in life , fortuitous changes in career areas means income now above 110k , 1 kid at uni in expensive area and dog.

Were on our bones about 11 years ago comparatively life is so much better, we made the decision to stop at one child at the time due to cost of living/childcare costs back then.

I've just come back from a weekend away where I counted my blessings every single day.

Sometimes I think it is a case of perspective, i'm glad to have funds to call the plumber out to fix the loo, to go on hols, to help DD with accommodation costs. To be able to save up for a second hand car ( and be financially sound enough to get one on credit if we want). So glad to not be renting anymore and live in a new build ( which many mnetters sneer at) with double glazing.

My daughter has mental health issues - we can afford to help her perhaps go private instead of navigating the ridiculously long nhs waiting lists.

This is just my perspective but nothing will ever compare to our being on such low incomes 11 years ago.

On our income, that wouldn't be 'massive'.

Maybe it varies in the county as I was looking at Bishop Auckland as a friend shared a house for sale on her socials and I started looking. I guess it depends what you’re looking for but I’d be happy with a terrace, I’m living in a flat now so it would be an upgrade for me and I could then save what I spend on rent (nearly 17k a year). Either stay there for a few years or temporarily. Otherwise I’ll head to the north west - Merseyside probably. Fortunately I have teams in multiple parts of the U.K. so could keep my job and just lose my london location allowance - all of 5k which definitely pays for the increased cost of living in the capital, not!! Haha.

If it wasn’t for the kids being in school and their dad living nearby I’d have left the south east 12yrs ago. It’s quite depressing I haven’t even started my mortgage yet, but I am also fortunate to not be struggling. I have been in both camps, being a teenage mum on benefits to now being a higher tax rate payer. I’m hoping one day to just have my one property and something to leave my kids. Just have to hope I can keep working another 25yrs to pay off a mortgage (or stay in County Durham!!)

I'll take your word for it. Never met him as far as I know.

But thinking that dealing professionally with money is the same as developing financial literacy on how to budget as a household, how to stick to that budget and live below your means is simply uninformed.