'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.

My wealthy granny always felt if you were lucky to have money you should use it to employ lots of people who needed jobs. She was big on cleaners, window cleaners, gardeners, hairdressers, cooks, using local shops etc.

I think her mindset was from the pre-welfare state era.

It all depends on where this earner is living, have they been able to buy property 10 to 15 years ago, when they were relatively affordable for a family home, and whether they have preschool the children who go to nursery or need childcare.

If you live in London, or around London, 120 K is really not much for all of that. especially given that amount over 100 K is tax at effectively 60%, given the loss of personal allowance, and that these people don’t get free childcare hours until the child is three years old. Our nursery cost almost 2K a month and it’s not a fancy nursery - it’s pretty standard. The tiniest family homes are over 700K in the area where I live, and it is NOT Richmond or Kensington, is just more or less ok area of London with decent state schools. Just slightly bigger terraced ones with four bedrooms are about 1 million and over. Detached ones - forget it, 2m? If you don’t have something purchased long time ago so you have equity built up already or some family money allowing you to buy here, it’s impossible even on the “high earner“ 120K salary. Even on two of these!

That’s my philosophy too.

Yep, but that’s assuming you do actually have the money to employ these people - the article is about people who say they are struggling (so don’t have money) and yet are still paying a cleaner, gardener, etc. It’s the obvious place to economise.

i feel the family home thing is pretty much dead in nice parts of London unless you are a trader/magic circle lawyer or have family support or both. I do have a friend with a 1 year old baby (late 30s) who married someone born in 1968 who had his apartment for over 20 years. She lives in a house in London now despite both her and her husband being on modest incomes.

We all live in flats now or small terraced houses (2 up 2 down). East London is the exception. Nice towns in home counties are now much more expensive than large swathes of outer or east london so would probably go the same way. Apartments in st albans or harpenden are basically the same price as my flat in zone 3. Tiny terraced houses (same square footage as a small london apartment) in those same areas are also around the same price.

I have given up, i just look at flats these days in both zone 3 or zone 5. My requirements are that its a good size (50% bigger than what I have) and share of freehold.

*to me middle-class means ability to buy a reasonable property (in a decent area) but also able to afford childcare (if required), go on holiday regularly, replace tech or household goods when needed without it causing financial strain, socialise freely in restaurants/pubs with friends, buy new clothes, have hobbies, invest in education or enrichment activities for children and save for decent pension.

Doing all this without going into overdraft or taking out a lot of debt and have spare money at the end of every money. what those people featured in the article show is that many of them can't do all the above without it causing financial strain*

To me that’s a pretty high standard of living, I don’t know anyone who could do all of that without thought. I don’t think needing to have a budget for eating out, or picking two activities for your child instead of three is unreasonable, nor is planning your pension or financial future.

I also don’t think it’s facial strain when there’s a lot of wiggle room in your finances. If my washing machine broke tomorrow I could replace it, I’d then maybe eat out less to replenish my savings - and I consider myself very fortunate to have that option. We all make financial choices, your describing someone who should never need to think about those choices because the money is just there.

You know people in Britain haven't voted for decades. It is playing to gallery of old (wealthy) people. I have obtained EU passports for my daughters so they can settle elsewhere if they choose. If I had my time again I would leave the UK. It has become a rentier society. Grubby. Little to no social investment. Triple lock on pensions instead. Schools that fall apart for the young and declining education. This wasn't always so but I don't want my children to have to contribute to a society that has largely not bothered with their future.

@Jellycatspyjamas I think your assumption that those things are for the wealthy precisely illustrates the idea that middle class = poor in the UK. Twenty years ago a middle class family in London could expect to send their kids to private school, have holidays, a car, one earner family etc. That used to be the norm. An assumption that holidays are now the preserve of the wealthy rather than the middle classes - shows the extent of the change

going on holiday can mean ryanair flights to Spain while eating out can mean Nandos or Marugame (the point about socialising in restaurants is being able to afford to go out if invited) . We all save on some aspects of our lives while splurging on others. My DH doesn't have a gym membership but he did spend £800 on his bike.

I am from another country, and in my home country, the middle class can do all of that. They may live in government built flats but it usually has 3 bedrooms and they have a mortgage (less than 25% of salary on average). I count it as reasonable because it is near amenities, schools, and two children of mixed gender can have their own bedrooms and it is safe and well maintained. All my cousins back home (in their 30s and 40s) have that lifestyle.

A lot of people i know in London have that lifestyle though admittedly a lot of them also have family help so that artificially deflates the amount of money they need. One thing i do find in the uk is that a lot of couples feel a 3 bed semi is the only option for a family so they tend to stretch themselves on the house aspect and also because it is seen as an investment. Moving further out has its own costs, both on your career and commuting which affects future disposable income. This does cut down a lot on disposable income.

I think that demographic is accurate, scattered with older people who are retired lecturers, Dentists, GPs and other professions that would have easily bought in various parts of 'nice' London. There are also sadly lots of empty properties purchased using international wealth. It is such a contrast to my upbringing in London where various classes lived and like in my parents' case, adults were not apolitical.

i didn't mention private school and that whole list of things- middle class people in other countries have them. We have cousins and relatives(same age group) from 4 different countries, the only two countries where it isn't the norm for the middle classes to have all these things are Israel and UK. Our standard of living in UK is considered high here but pretty average elsewhere and our flat is considered quite small.But in the UK, we need to buy a small flat so that we can afford our lifestyle which we prize more than property

only silver lining is prices of london flats have stayed static for around 10 years. This includes all the period conversions and share of freehold in blocks. long may it continue.

An assumption that holidays are now the preserve of the wealthy rather than the middle classes - shows the extent of the change

I go on at least two holidays a year, and take weekend breaks. I pay into a private pension. I can replace household goods when needed. I have a cleaner and pay for private tuition for my DC. I’m not wealthy, I don’t particularly consider myself to be middle class. I do plan my finances, holidays are a considered purchase and I have savings for unexpected expenses.

I consider myself to be in a very privileged position and couldn’t really complain if my money doesn’t go as far as I’d like. I’m not on a mumsnet huge salary, certainly nowhere near £120k but I manage to have a good lifestyle. I can’t muster sympathy for people on £100k plus complaining they’re struggling because they’re overstretched, when I work with people who have literally nothing.

Yep but my 2 bedroom flat in east London was also over 600K! (Newbuild but I couldn’t afford to buy a NON new build as I didn’t have 10% deposit, had to use help to buy with 5% deposit. By the way every young couple in our development is screwed because of cladding issues- work is ongoing now but will take another couple of years. All young families weren’t able to sell and upsize when market was good when they wanted to sell). 2 up 2 down is what is 700K in the area I live now

Presumably it is childcare and child-related expenses that are mostly squeezing this income bracket. We are just about ok but our DC are not in nursery now - if they had been and our mortgage and bills had jumped like they recently have, we would have been in hot water. But we are in London. We are moderating our holidays, and capping what we are able to spend on wraparound care, activities, holiday clubs etc rather than just using them as and when. And being much more careful with food shopping etc.

@Jellycatspyjamas

you are so tone deaf 🤦‍♀️
people on 100K CANNOT afford things you can afford. If they have childcare costs, live in London and just got on the property ladder or trying to get on it
if you think people swim in money on these incomes you are 🤦‍♀️🤦‍♀️🤦‍♀️

London is tricky - eventually all the social housing left will have to go to key workers and all on benefits/not doing jobs will be turfed out. It is already happening.

The Government also need to crack down on empty properties in London more - it is quite simple. If a place is not rented out, pay 3x the council tax or even more. It would be so easy to implement. There need to be deterrents for people leaving properties empty.
Again, they do this in some parts of Switzerland. If the property is not rented out, you pay tax at a deemed rent rate. So if you are not letting a house out that has a market value of £2500 a month, you pay tax on that deemed rent. That gets people renting it out quickly unless they really are very very rich.

Sorry to hear that. Yes even when you buy flats, it is so difficult cos there are so many issues. Cladding, ground rents, leasehold etc. It takes so much time and energy.

Before i view anything i email the agent- asking who is the freeholder (in case it is the residents who own it, my flat is technically leasehold but the freeholders are my neighbours who bought the freehold), what are service charges, what is ground rent. There are very few new builds in my area too. Most are pre war.

However my approach means most properties are ruled out very early on.

It must be quite a nice part of east london. My flat was around 400k in nw london and my friend had a similar budget, she bought a 3 bed in romford.

£2500 is a rental price of a two bedroom FLAT in East London.
where are these imaginary empty houses in London by the way?? Mostly in areas like Knightsbridge or Notting Hill where people bought them with international money to park their gains? Where rent is like £5000k+ ? Yeah that’s going to help 🙄

But isn't that what should be happening? We couldn't afford to live in London so we don't.

But that's the problem, people really think 100k = 100k in disposable income or at the very least, close to it.
People really don't realise now high taxes are and how expensive unsubsidised life is.

It’s relatively nice area (devoid of good schools though) but it’s also new build premium unfortunately. As I said I would have preferred to buy a 400K one but couldn’t. Im still glad I was able to buy even that as eventually I hope to be able to sell it - but without appreciation. At least get the money back! But yeah flats now are also fraught with danger

“£2500 is a rental price of a two bedroom FLAT in East London.
where are these imaginary empty houses in London by the way?? Mostly in areas like Knightsbridge or Notting Hill where people bought them with international money to park their gains? Where rent is like £5000k+ ? Yeah that’s going to help 🙄”

Well at least tax the Kensington empty mansions properly and extensively so we can afford some proper policing in London again.