'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.

Lillian has possibly got stuck in a situation where her property was overinflated when she bought so can no longer sell as wouldn’t get enough back for a deposit on something else or she’s unwilling to sell and switch to something smaller/cheaper in a different area or she has some other additional expense. Clearly she’s been unlucky to have £25k of unexpected work to do on her doer uper or she’s failed to have any check of what known issues would cost to repair before she bought. There are loads of towns and villages in Co Durham where you can buy decent houses that don’t need a ton of work for under £100k and with a combined income of £70k that really shouldn’t leave you struggling.

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

I am in no way defending their record, but Labour will be no different for the simple reason that our economy is turbofooked.

Don't you think there's a bigger problem if people on incomes that high need to be looking into batch cooking etc?

But you do live in zone 2? And yeah... tbh. Living in zone 2 and eating out all the time is expensive. Why would you expect those things to be affordable for all but the most privileged?

If the house was worth a million pounds they wouldn`t be stressed, it is the debt that is worth a million pounds (plus interest) to the banker who made the loan.

You can't really win on these threads if you live in London and bought your house fairly recently. You have a good income to afford it, but what you can afford is pretty bog standard house-wise. But you have options! Of course, if you utilise these options and downsize somewhere cheaper, you're called a DFL and roundly derided for ruining the local area for locals.

If you live in outer Birmingham and are financially struggling, no one tells you to move to Hull.

It should concern everyone if people on good salaries feel pinched. Of course someone on minimum wage is struggling more, but it is degrees of the same struggle - transfer of wealth upwards - not financial illiteracy.

If the middle classes stop spending ("cut their cloth"), drop hours (via pt work, extra holidays, extra pension i havent taken my full wage for a decade as it hasnt seemed worth it. But thats all less tax), move to cheaper areas en masse (driving up local prices) - this will negatively impact everyone!

top 3% nationally is not top 3% in London. You are also single.

my DH and i were buying a flat in zone 3 london while his colleague on 100k couldn't. we were on less than him even when you combined our salaries but we had two tax thresholds and hence more borrowing power.

We are top 5% nationally based on this https://ifs.org.uk/tools_and_resources/where_do_you_fit_in#tool-results-section

We can't afford bigger than a 2 bed flat or a 2 bed flat with box room in our area and even in well heeled areas in zone 5 or the Home Counties. This is because while we had the headstart with rent free living, we did not get gifted cash unlike many londers (see PP with £180k gifted deposit, imagine if she had your salary).

I go on holiday every month/every 2 months on a weekend break but I don't have a car or designer wear. I assume people don't do every single thing all at once when on regular incomes/lack bank of mum and dad- the car the city breaks the designer wear the restaurants. they probably do prioritise based on what they value.

People are moving out of parents houses later so they have more disposable income for luxuries. ditto for people who were gifted money.

Sorry - typo - middle class income (ie in the higher bracket OP mentions) - My mistake.

But we are also of the generation that really profited from the house price boom in the 90s/early 00’s. Both bought flats that doubled (more than in DH’s case) in value so we ploughed it into our next house.

Most of our ‘money’ has come from coming to the housing market after the collapse in the 90’s (we saw older friends financially crippled/bancrupted by negative equity), so we’ve been very careful as neither of our families have money.

I am guessing others in our income bracket are of a similar age and were similarly lucky - our kids’ generation certainly won’t be unless we downsize and give them a hefty step up (which we personally plan to do).

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

is that based on paye? The real high earners aren’t on paye eg a partner in a mc law firm on 1.5m is self employed.

This isn't true. There are different ways of dealing with a turbofooked economy which make a big difference to those at average and below. Not asset-stripping for example. Not privatising on ideological grounds, another example.

Please don't spread this lie that they're all the same, or we'll be mega-turbofooked when the Tories get in again.

Even the sold houses, one was an auction, the other was cash buyers only. I already have the radius set to +1m. You're clearly years out of touch with house prices.

We would really struggle in a household income of £60k. Our mortgage is £1500 a month and nursery fees £1200 for 4 days a week, student loan on that salary another £250, add in bills and food that would take the whole of a 60k take home salary with nothing to spare for emergencies or any disposable income. We are on £110k and comfortable.

Of course. But low income households have always been told to cut back to survive.

And I’d expect there’s plenty of add ons that could be cut if required (gym,tv, eating out). Which is very different to cutting back on food/ fuel.

Whatever the government are doing now isn’t working. And it seems they are only interested in propping up their own wealth. Under funding councils, education, NHS. And for what gain? It was a load of bollocks re austerity. A choice they didn’t have to go for. Brexit too.

Exactly my point! The post started with the article about how 'middle class' or the so called top earners (60k- 120k) living not very affordable. The fact you are saying that living in zone 2 and eating out 4 times a week (I order like Five guys for god's sake!) is only for the 'priviledged' is hitting it on the nail. Also if an 'average' person thinks like you, who are all these people shopping and eating out in London??

@BusyMummy001 yes, I assumed you were older. I think the point is the people earning similar to you but who are younger don’t have loads left over to be prudent with as they don’t have the equity gains to free up money.

State dependency is so high

And the tax burden is on the top centiles who are generally maxed

I thought it during Covid tbh so much spending

And I’d expect there’s plenty of add ons that could be cut if required (gym,tv, eating out). Which is very different to cutting back on food/ fuel.

What does the country look like with no gym, no eating out, no retail?

Wow. A childless couple comfortable enough on£120k? Are you writing for the Mail because otherwise I see literally no point in your post, other than to rile others up. And I say that as someone on a similar salary myself (68k London) but with far more commitments and understanding of the reality of adult life. And children. Because believe me you are massively underestimating how much they will cost.

Say hi to Sam on features, she owes me a Pinot.

State dependency is so high

the population demographics means it’s only going to get worse. The gov needs more tax, it’s high now & look at the state of services.

Like I said all my family live there. All my school friends as well.
A cousin is currently selling. We sold a property just last year there so have very recent knowledge of the market on a personal level aswel.
I know Watford very well.!

Look at the sold prices, £400,000 is very doable for a 4bed and if you were on rightmove looking not that long ago you would have seen many more.

Yh but the whole point of that article is to show that actually 120k doesn't buy you the lifestyle people seem to imagine...and that should ring alarm bells. This thread is pages and pages of people sniggering at how they'd be living in laps of luxury on that wage. I'm not saying it's poverty, but a lot of people really are detached from how much things actually cost when not subsidised by the state, or when you have low housing/travel/childcare costs.

Pretty much. The house is only worth what the bank values it at, in a particular month/year.

It's not an asset, it's debt.

Exactly. If the people on 120k a year are not eating out, paying for gyms and TV subs than who is going to keep all those sectors afloat...

That leaves over £24k for food and bills. That seems enough?

OK I know I’m comparing that to my below £20k income for 3 of us. And that’s for everything. Incl mortgage.

Of course living in central London and eating out is for the privileged. Why on earth would you expect those things to accessible to everyone? You're mad.