'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.

Of course, that is very hard, and our society and political leaders should be ashamed for this.

But if someone else in better situation feels their material quality of life has gone down (compared to before), they should not be shut down.

How are countries like Singapore and Switzerland managing to have such strong economies that even a person working on a so called lower skilled job can earn a decent living but in UK living standards are going down steadily with no action from governments.
Since 2016, how many PMs this country has had and what exactly have they worked on?

Politicians like Boris Johnson, Nigel Farage and Liz Truss and anyone who has been corrupt and has caused the country to become poorer should be put in prison for at least 5 years.

That income gives choices.

Private dental and medical
membership of sports / health club
saving £700 / month.

I think that’s what should be acknowledged. Yes the income gets you less of the lifestyle one might expect but you have choices on what to spend that money on.

She should be getting some benefits on top of her salary unless she has quite a bit of savings, though. I just put the figures into entitledto and it came out at £1300 UC per month, so if she isn’t getting anything it could be something to look into.

@1960swhatshappened I shouldn’t have called it disposable, that’s all of the money left to pay our bills, food, fuel, parking for work earning £95k jointly - £1,800. You would have more money left over for these things on UC (which I know for certain as last year we were on UC).

@SarahAndQuack we aren’t making any pension contributions. We both currently have non contributory pensions but aren’t topping anything up ourselves at the moment because we don’t have the money to do so.

But on 20k a year from your job with three kids how much extra do you get in terms of universal credit, benefit and support with child care? I bet not much less than someone on a much higher salary after tax

If you look at mothers at home matter, single income families with kids in London on 60k have about the same spending money as those on 12k who rent as the benefits the 12k earner is entitled to makes it similar to what the 60k earner can have after tax

There have been quite a few threads along those lines recently. I hope this issue gets heard about and recognised by the government.

Well in Singapore 85% live in government housing which they buy. It is heavily subsidized and with government grants, the average new build 90sq m flat requires no cash outlay (every Singaporean is forced to save 20% of income into a savings fund plus 16% employer contribution, and for most flats in the outer lying suburbs, the forced savings are sufficient for a 15% deposit). In 2022, more than 80% of new home owners who collected the keys to their new flats used less than 25% to service their HDB housing loans. This means they could pay their monthly loan instalments using CPF contributions, with little or no monthly cash outlay. The average price of a new build flat only 4-5 times of the average household income.

The downside is that it is leasehold but the freeholder is the government which happily does all maintenance and the service charges are quite low. However very heavy government intervention in the housing market that not many brits would appreciate!

Affordable housing, low taxes and cheap hawker food (government rents out spaces to hawkers at discounted rates) means there is just more money left over. Singaporeans complain but overall 89% of people can afford to buy their home and save for the future while eating out regularly. Only con is no work life balance which is why people are reluctant to have children.

'Currently' being the key word.

Those on UC and having their rent paid won’t be building assets. Whereas those with a Mortgage will be.

it feels like a two extremes are forming. Those that live in rented homes (sub standard?)
bad teeth (dental is a luxury without nhs dentists) and not able to save for their pension. And the ones who can pay a mortgage, dental, pension etc. It might feel like the discrepancy isn’t big but actually I think it’s huge and is going to be an issue on the future.

I hear this.

I am frustrated because I feel like the best trick of the super wealthy (which let’s say for arguments sake is those with a net worth of more than 10m) has been to convince the relatively poor members of our society that it is the working ‘middle classes’ that are the problem.

is it fair to increase the Tax burden to more than 50% on entrepreneurs? On people who are (irrespective of the circumstance, luck or privilege that got them there) busting a gut and making sacrifices to earn their money?

while there are tech companies / non doms / tax haven users galore who are NOT paying the for the benefit of operating economically within our system.

I feel like the infighting between the have-nots and the have-somes is hugely distracting us from the common enemy here.

That"s right, London is just a giant Ponzi scheme from top to bottom

Dental is a really interesting/divisive issue. Many many years ago when I lived in the USA. my job paid family dental insurance after 6 months employment, so I sent my DH for an inspection. He went, was told what needed doing (all funded) and ignored it because he didn't want to. Now exH, I hope his teeth are giving him serious gyp: he had the opportunity, and did NOT take it.

Yes, we have a buffer which we have planned and deemed necessary (my job is anything but stable so we have to account for that) and whilst I keep my wage it does give us options-but the margins are not as wide as one might expect seeing the £120k headline figure. I’m not sure where I would find an NHS dentist (my partner has managed to get a £2k dental bill over the last 3 years which has thankfully been covered by the insurance)

And we live in Scotland so take home is about to go down thanks to the new tax regime so that buffer will be changing

Nothing. I am disabled and chronically ill.The 20k is all I have plus free school meals.

Wow can’t believe £2335 universal credit on top of £2053 wage, you’ve said this makes no sense so no judgement but just jaw dropping if this is the norm.

I read the Guardian article. These people are working class (albeit fairly well paid) but they depend on what they can earn for their living.

The "true" middle class don't.

The middle class has capital. If you haven't got capital then no matter how you dress it up you are working class.

When UC inc child benefit is added onto the take home of a salary of £20,000 it’s the same as the take home on a salary of £52,000
However
The £52,000 earner will not get any extra help with nursery fees.

The above figures for the £20,000 salary have not accounted for any help with rent as that is unknown, but of course they could get some. The higher earner can’t.

So as a very minimum it’s the same as someone earning £52,000

The greatest trick of the super wealthy was to convince a lot of people that an ex-council house somewhere near London 3 miles from a train station was worth 500k+, LOL, AND that you had to pay them interest for the chance to "own" it! The biggest con trick of all time, and the most damaging for ordinary people, whether they think they are "middle class" or not.

Apologies I have tagged the wrong post
My comment was for @Unexpectedlysinglemum

And the Mail is the voice of reason?

OMG yes. It's basically a left wing Daily Mail. Its "exclusives" are usually nothing more than interpretations of surveys or articlae based on press releases from research groups and it's anti-monarchy slant comes over as nothing more than a desperate attempt to maintain "street cred".

I now read it on-line because it is free; but for no other reason.

We're about in the middle of that (90k), down south, and doing OK. Mostly because we have some family help with childcare.
If we had to use nursery full time I have absolutely no idea how we'd manage.
Mortgage isn't that high, but will go up later this year. Currently £1k.

We could absolutely cut back if needed. But it's about your perspective, upbringing and expectations.

I grew up poor and can see all the luxuries we have (sky TV, swimming lessons, too much food, branded crisps, takeaways, friends over for dinner, nice christmas/bday presents).

Husband grew up more comfortably and doesn't see any of these things as luxuries. He thinks this is normal living. He has a 'personal' disposable income of £600/month, and struggles on that amount. He saves none of it. Doesn't go on any household items. He has no idea how lucky he is and would definitely say we're struggling!

*So I earn around this-take home is actually £4600 after private pension contributions, dental, medical cover etc. I paid £41k in income tax last year. My partner brings home £1600. Which gives us a (on paper) healthy household income. We have 3 small children.

Then deducting nursery (£1400), wrap around/holiday childcare x2 (£900) (not
eligible for tax free childcare), mortgage (£1000), utilities including phone/internet (£400-we are off grid for heating fuel so more expensive), insurances (£300), car fuel (£300-2 cars, owned outright, not flashy), food shop (£600-800), our one genuine luxury is a £150 membership to a sports club which we use to take the kids weekly swimming/sports to (our local council pool would be about £20/visit for just the pool).*

Many of those are choices though, you have the future benefit of a private pension, you have the benefit of private health and dental, the ability to save a significant amount each month. If you decided to change priorities you could significantly increase your disposable income. Things being tight because of where you prioritise your spending - no matter how worthy or responsible - does not constitute struggling by any means.

Do not get me started on the people who start businesses... you are in for a lecture. Over 70% of entrepreneurs' businesses, no matter how successful, fail to survive the founders death or retirement. Usually, because the businessses are quite niche (DH is the no 1 supplier of heat transfer technology to the Royal Navy). we are not original equipment manufacturers (that's Rolls Royce) but we can and do build and rebuild/remanufacture their kit, and have done so for 35 years. We're a titchy business, with 8 highly skilled people, all of them closer to retiring than 25. We should have a bright future, but we haven't had a CV from anyone under 50 in 10 years.