'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.

That was partly my point, but I was also just comparing us with friends who are around the same age.

But, also, our own decisions did play a big part. Moving to a significantly cheaper area and not buying to the max that we could have afforded, where others have stretched themselves as far as they can. Buying when most of our friends / peers rented and people thought us mad. being content with what we have, rather than constantly wanting more. Not seeing holidays as a requirement, but a luxury for when we had more money. This year is proving tighter for us, so the chances are we won't have a holiday this year. Where as a friend is complaining they won't be able to afford their traditional 3 holidays this year, only 2.

Some people have their expectations set too high. If I were still living zone 2 and insisting on a fancy holiday each year, yes, I would be struggling a lot. Zone 5 isn't perfect, but means we can afford a decent standard of living.

I am what here the media calls top 3% earner and I live in London, no children
and this is my monthly spending allocation in a nutshell (without revealing £)

• 50%+ taxed, I have about 50% of my so called high wages left as disposable income
• 20% spent on rent to live in zone 2/3, have been trying to buy a property in London zone 1-3 which is likely to increase that 20% to 30% at the current mortgage rate of 5ish%
• ~10% on food - deliveroo twice a week, eat out max twice a week, grocery shopping once a week
• ~5% for car, energy and TV subscriptions etc

So i am only left with less than 15% for investing for retirement! and some of that I use for travelling, I tried to take two x 2 weeks vacations a year

I have been unable to buy a property - been searching for 1.5 years. The main issue is lack of good properties in our budget...and the high interest rate

I think from my perspective, while I got a pay cut of ~40% vs working in the US, I pay similar amount in terms of living expenses. I feel comparatively 'poorer' vs my peer friends who live in the US and Asia (either they get paid much more for the same job or they are taxed much less with lower living expenses)

I don't think what I described above is considered top 3% lifestyle...

I barely do shopping (clothes, shoes etc), maybe once a month but I am shocked to see the malls/high street/restaurants always heaving with people and the airports always full of people travelling on holiday...also I notice there are a lot of really nice cars (BMW, Mercedes, Range rover of sort) parked at council estates

I am sometimes curious if I am top 3%, I am thrifty and still don't have enough for savig for future, HOW ARE OTHER PEOPLE living so lavishly??

£700k at 5% is more than £4k a month.

Mate you're just shit with money. Living in zone 2 and eating out 4 days a week. Thrifty 🤣

So if you are a middle earner, no someone on benefits is not as well as as you are.

I'd be interested to know how true this is - it seems to me that you would need quite a high salary to obtain an equivalent level of take home and extras when the extras taken into account (child benefit, free prescriptions, childcare help, FSM, etc).

It's alien to me because we don't even get CB, but I am considering giving up my career and becoming a SAHM because I am currently paying 60-odd % marginal rate tax for the privilege of never seeing my DC, so I can thoroughly relate to the OP.

I have family in Watford. One of which is selling a 3bed but
Heres a quick rightmove search for 4 beds. 0miles from Watford. If your happy to go 1/4 miles or up to a mile out then there’s more

I guess I struggle to believe that someone who clearly earns as much as you do doesn’t also appreciate that the vast majority of people earn less than them.
Or do you really believe that a £600k mortgage is the norm/affordable?

I think you just wanted to have a go at me because you had misread my post and have backed yourself into a corner.

The alternative is that you’re completely out of touch with reality.

You have someone else (deliveroo or a restaurant) cook your dinner over 50% of the time. I call that living pretty lavishly!

Yeah and which one of those can is actually available to buy?

I think the issue is that many middle income couples live, financially, to the max of their income and when mortgage rates etc went up there was no slack, but they can’t renegotiate utilities or mortgage payments, so yes many are struggling.

That said, we’re a middle income family and were massively hit by it - our mortgage doubled, as did our gas/electric bills [which on a large house was extotionate] and there were a few months where it was a serious shock and we took on boar the fact we may have to sell up and downsize. But we’ve always be financially cautious (admittedly anyone looking in from the outside would see a big house, 2 bmws, kids in private school and not believe that) - we’ve saved money every year, topped up DHs pension, never cashed in any shares etc because DH knows he could be made redundant at any time and never get a job again at his age. In last 10 years there have been 6 redundancy rounds and he has held his breath each time.

But we’ve not really had to worry about the bills, buying food (though I do get pissed off with the kids if they waste it now, and we buy fewer luxuries), and we have had a few smaller holidays (one week in the UK and I didn’t join the kids’ annual ski trip with dad). My husband’s plan of retiring at 60 is now extended to 62, largely because he can’t afford to retire with one or both kids at uni now and he needs to top up the savings that we’ve dipped into. I’ve been SAHM with 2 kids with 2 autie kids, one who may never live independently, so we’ve planned around his income.

So on the one hand, I understand why some are struggling… but I also find it hard to understand why they didn’t protect themselves with a rainy day plan.

It’s lower income families, with no access to shares/savings/equity in their homes or the option to cut down on pension payments etc, who really suffer. I grew up in a council flat, single mum, and remember what it was like to go to bed hungry, in double PJs and my coat because mum couldn’t afford another 50p in the meter. It’s those families I ache for.

You are a massive dick, though.

yes i work until 7-8pm most days so unfortunately not easy to cook...
but really are you saying only what country's top 1% earner should live within London zone 2 and eat out?? very strange definition of being 'shit with money'

The main issue for the majority is that wages haven’t risen in line with house prices and other costs. Even two years ago our monthly outgoings were £900 less than they are now, thanks to a nice re-mortgage. Have I had a pay rise? Nope! 🙃🙃🙃

@Onaladder plenty of council estates in London have expensive houses to buy.
But my niece used to drive a very expensive car. She worked as a salesperson in a garage and did not learn loads, but part of the package was a company car. As soon as she left she was driving a cheap secondhand car like the rest of us.

you were complaining about not being able to live lavishly. Eating out/ having a take away 4 nights a week is pretty lavish.

And don't give me the "I work till 8pm, I can't possibly cook". I could list you 50 meals off the top of my head you could cook quicker than deliveroo can deliver!

It's house prices. All of my older neighbours that have been on our road since the 80s are blue collar, usually single income households. Everyone who have moved in in the last ten years are dual income households, nearly all middle earning professionals.

Haha yep.

Batch cook.
make a pack of mince last several meals by adding lentils.

Being able to order deliveroo is a luxury. It’s not making do.

We are just getting into the months that typically people start putting their houses up for sale. So yes, many now all over will be sstc.
If you keep an eye out and are interested you will see more coming on the market as they did last year.

The fact that properties are sold is irrelevant really. This gives an indication of property prices along with the rightmove sold website.

If @Onaladder is working until 8pm then presumably she's not home until 9 or later, so I can understand the reluctance to cook anything more sophisticated than beans on toast. It's more the norm to eat out in other countries - when I lived overseas, kitchens tended to be tiny because eating out or ordering in was the norm.

Although I absolutely feel for you, I don't think 'I've got it much worse' is helpful here - it's exactly what this govt's divide and rule approach aims at.

The fact that middle class salaries no long buy a middle class lifestyle should worry everyone from an economic (and political) perspective, because of what it tells us about the health of our economy generally.

One example - the Tories have never given a shit about the lowest earners, but they have always cared or claimed to care about the 'strivers'.

From the evidence in the Guardian and on this board every day, they are either not able to look after the 'strivers' any longer (political inedequacy) or they are choosing not to (a shift in focus towards the 1% only, leaving the MCs to fail).

I wonder which it is?

ETA: I know we're all strivers and that's a cynically ideologically term to flatter those of us born with economic privilege that we won't acknowledge so don't @ me

@BusyMummy001 Im confused how you have stretched a middle income to afford a big house, private school, overpaying into a pension & early retirement?

Same, I have looked at buying a flat for 325k, with 40k deposit I’d be looking at around 280k mortgage. Can only afford a flat so looking at £150-£200 service charge and then mortgage repayment was around £1700 minimum. I think that might have been on 30yrs too which broker reckoned I’d get, even though I’m 47 as I have a decent pension and he claims I can just bring down the term as the rate drops. I’m getting 3.5k take home so this is over 50% of my income, whereas rent is £1400, no service charge. I just can’t risk that right now, and not for a flat where I’m sleeping on the sofa every Uni holiday as I give my room to my son. It’s quite depressing people think I’m loaded as I’m on a decent ish salary when I’m really not. Maybe if my housing cost was minimum I would be (and that’s the eventual plan but stuck here for 2.5 more years)

The fact that middle class salaries no long buy a middle class lifestyle should worry everyone from an economic (and political) perspective, because of what it tells us about the health of our economy generally.

The economy is fucked

The conservatives do not care about anyone except asset stripping for their rich mates.