'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.

Sorry to be so out of touch but could I ask what is a Dink? 👵🏻

But they don’t actually have another £100k than you. After tax and removing any benefits you get (ie child benefit, child tax credits) and taking into account the high cost of commute and childcare in the south, then they won’t be living in the lap of luxury

Yes agree with this.

But individuals can make choices. Not great choices admittedly.

Exactly.

https://www.express.co.uk/finance/personalfinance/1873922/HSBC-mortgage-rate-interest-increase

Double Income No Kids

A DINKY is the same but with Yet at the end. That term seems to be dropped these days though

You're very clearly wrong though.

The take home pay on £60k is about £3.5k a month - so they would have £0 left, the rest is tax.

Can you please breakdown your income / outgoings for a family of 3 on £20k?

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

What leaves 24k?

🤣🤣🤣
Yes of course you’re right.
How stupid of me
Im just a local girl

As in, none at all, or the amount we had, say, 20 years ago? It was fine.

I think many of the types featured in this article see eating out as a norm, I see it as a treat.

Do people not understand that if you take home 1.5k on 20k then 60k doesn’t equal 4.5k?

You show me one then. If you're so knowledgeable it shouldn't be hard.

Yes, I see that - the issue is the very sudden and extreme increase in mortgages and fuel costs that many of our friends who are ten years younger than us just didn’t have the slack in their finances for.

We were hedged, being older/having savings and were painfully aware that economies crash - we remember the strikes of the 70s, the candle lit nights and cold baths because of black outs and 3hr queues for bread (me sitting on the front of my baby sister’s pram). Those times hit our parents really hard and it really shaped both them and us - so we’re a tad boring and very ‘careful’ with our money. 🤣

I manage fine on a total household income of £30k including all benefits. One child.

Who are those people? Tourists, day trippers, people who eat out occasionally or are celebrating.

I wouldn’t say wrap around childcare is a luxury: we need it to be able to work

This is a difficult one. Because so many people made choices , based on all the information at the time. Now things are so different. We have about £180k BUT our mortgage went up 1k per month overnight. We have 4 kids ( 2 we pay maintenance for) and like everyone else our bills are almost double what they used to be. I work in the public sector and my salary has only increased 2% over the last 5 years so spending has taken over!

I am so thankful we know longer have childcare costs because that is what is killing so many families now. We didn’t get any of the free hours and I’ve never claimed child benefit.

we made a life plan, but things change so no, I don’t feel rich. I did used to!

£100K in tax is around £240K gross, or £140K net (assuming all tax is PAYE), or £11.6K per month. A mortgage of £750K is around £5K on current interest rates (assuming 25 years repayment), if the childcare is around £4K (say two nursery aged kids full time in London), it leaves £2.6K for absolutely everything else. Of course, this is far from poverty, but it is not luxury holiday league either, and her mortgage-free and childcare-free neighbour may well have higher disposable income. This also assumes the PP does not save anything for retirement, has no other dependents etc.

Good post. We bought pur house 5 years ago for £300k, in a town, commuting distance to a city in the South West. It might cost around £400k now as we've done it up quite a bit, and a bit of inflation. It was the top of our budget, with a 10% deposit. Mortgage is £1160 p.a. , this will likely increase by around £400 pm next March, when our current rate ends.
It was just a fairly run down 3 bed in a town. Nothing fancy. Buy I was 35 and expecting our 2nd dc. Met my DH early 30s. Could never have bought a house before, simply couldn't afford it.

We can afford it fine now, and could actually have afforded a slightly more expensive mortgage when we bought (but not the deposit). Glad now we didn't over stretch. But even with decent salaries now, it's hard to know how we can ever upgrade - both work from home so the kids have to share as the small bedroom is an office for one of us.

The high interest rates mean that moving up to a 4 bed just isnt feasible, because we are 'being sensible'. So we are privileged and I am grateful, but it does seem a bit disappointing that we earn in the Guardian bracket, and can't afford a house with a room for each child.

@EmmaEmerald

As in, none at all, or the amount we had, say, 20 years ago? It was fine.

People have always socialised & gone out. It’s just today eating out has replaced pubs & clubs.

20 yrs ago Primark wasn’t a fixture & clothing was more expensive.

What do you think would happen to the economy if spending on retail & experiences went back to the levels of 20 yrs ago? 🤦🏻‍♀️

Good post, I also think some people on the thread are confused about what the term "middle class" means, and used to mean, they are confusing it with more wealthy classes TBH.

THIS!

This is another symptom of how our economy has serious problems. We are a service-heavy economy if middle-income households can no longer spend then the result will be business closures and more job losses.

No. I often notice that on these threads.

£30k with no student loan and child benefit: £2,148 pcm

£60k with student loan and no child benefit: £3,322 pcm

Housing and childcare costs can easily be 2k+ a month.

If we didn't live in one of the most expensive bits of the southeast, where even the smallest house costs about 350k, then we'd be ok. As it is, we're burdened with a mortgage that is massive for a fairly unassuming 3 bed semi detached. We can't really downsize, the cheapest house wouldn't be much of a saving by the time you factor in legal fees, taxes, moving costs. We'd have to move to another part of the country but DH's job (the higher earner) is tied to here and he has been looking but no luck so far. Renting costs more than our over 1k per month mortgage for a smaller place.

It's getting harder, that's for sure.

But why should someone who is from London have to move to the other end of the country?