'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.

No one is going to shed tears over people earning over 50K when we have so many children in poverty, people who can't turn the heating on, feed their family correctly in this country or find a decent, affordable home to rent and disabled and sick people being failed by the benefit system. That's the real meaning of struggling

The rest need to stop whining because they can't shop at Waitrose every day, afford little Hugo's private school fees or take the usual amount of holidays each year....

50k today is 28k in the early 00s allowing for inflation. You’re not paying school fees & multiple holidays on that 🙄

It's not just one of the main culprits, it's THE main culprit alongside globalisaton.

I'm not saying either of those things are bad or good because I genuinely have a neural stance on large economic forces. QE was a short term decision based on a dreadful situation and the long term consequences were always going to be what they are now and will continue to play out.

The countries in central and eastern Europe that resisted extensive QE and also, to an extent, resist globalisation and re-shore as much as they can, are the ones now with the improving lifestyles and personal wealth. This is already having an effect on EU politics as those countries (Poland, Hungary) are feeling more powerful and are flexing their political muscles and will continue to do so as France and Germany contrinue their downward economic slide.

We had the 'lost the plot line' already. Wake up and smell the coffee, I ask again, what is the impact going to be on the economy, if the wealthy, who cannot spend enough anyway to make up for the lack of expenditure from the population, on the economy going to be? Do you think it is going to be a good one for society, how do you think such an economy is going to help with equality? We are going to be like Mumbai!

This too.

Overstretched, didn't plan ahead and tone deaf to real poverty.

@CantDealwithChristmas what's QE?

I forgot to add, that while we are in the West Midlands now, we are from London.

We just had to move. Dh wage was 35k in London and I was working nights in a min wage jobs to save on childcare. it was unmanageable. We had to claim top up housing benefit and even though we were both working, no landlord or agent would touch us as we were “on benefits”. We weren’t a priority for social housing and the most was over a decade long for people who were a higher priority anyway.

Luckily dh job went fully remote and we were able to move, and actually buy a house. He worked for a LA and managed to get a higher position in a local LA here last year.

We didn’t want to leave London, uproot our children, leave everything we’d ever known. But life was becoming impossible.

I am not saying moving is an option for everyone, just that some people just have to do it. We are able to live here, buy a house on one wage, I’m no longer killing my self working nights and not sleeping in the day just to pay horrific rent and still get treated like scum because of having to claim top up benefits as those rents were so high.

We’ve actually managed to manoeuvre ourselves into a position we never dreamed we could be in 4 years ago in London though buying a doer upper and making money on it, currently moving to a far better area due to that.

84k household income, 2 kids. Do you think we live on caviar haha!
Childcare costs are so high. Once they reduce the mortgage rate will jump (luckily still on a low fixed deal).
Need 2 cars for our jobs. Already live in a cheap area. Had no help to get on properly ladder so did it later in life.
We grew up poor and only increased income considerable in the last 4 years (I moved jobs, DH upskilled in current role).

I had more spare money when I was on tax credits haha

I'm a single person, single folk rarely get thought about earning nearly £50k and I feel the pinch!

I don't think we need tax cuts. We just need higher wages in this country. The wages are really really low and we haven't recovered from the 2008 financial crash.

@Goldenbear

Anyone who uses 'wake up and smell the coffee', a tired and meaningless line, is never worth listening to...

@CantDealwithChristmas I generally agree. But for those of us that have made the wiser financial decisions (no car finance, no credit cards, not maxed our mortgage) and are earning a combined of £60k it’s still a stretch. We’re in a 3 bed semi, not luxurious. And no we don’t go on holiday unless to visit family or friends.

Overstretched, didn't plan ahead and tone deaf to real poverty.
I suspect that would cover quite a lot of people in that bracket.

I can see how a family with 2 children under 4 in a modest house in expensive area might be feeling the pinch on £60k. But there's a lot of articles in the press at the moment that seems to be "we earn £100k and it doesn't go far... How can we afford children on £100k? We're the really squeezed ones here".

I know a lot of people, us included, who decided to take a smaller mortgage, not have lots of new cars, not have lots of holidays and live within our means so we have a nice, comfortable, non-flashy lifestyle. It was common sense not to take on eye-watering mortgages and rely on interest rates remaining low forever.

I see it shifting to people with strong family/community support. To the remnants of the white working classes, the lower middle classes and the new and growing immigrant working and lower middle classes. These groups tend to be more frugal, family and community reliant, and socially conservative. I believe we see their increased confidence and share of voice in the national debate in the Brexit vote, the 2019 GE, and the increased walking back/questioning of ultra-Progressive stances and attitudes in schools, organisations and corporations.

When the liberal, wealthy (not really wealthy but access to cheap debt) middle classes were in the eocnomic ascendant, their views dominated national discourse, this was very clear in say 2001 to, say 2014. Since then, the dominant voices have started to shift.

I don't think any of this is bad or good, it just is. It's happening and we are seeing both main political parties adapting their rhetoric and initiatives to match. I think it makes the middle classes uncomfortable without really knowing why, hence we regularly see this sort of 'something's gone wrong' handwringing in the middle class bien pensant media.

I believe this re-balancing will continue to take place over and play out over the next 2 - 3 decades, economically and in politics and society in general.

Yes, a lot of families/single parents were better off on tax credits and are better off on UC. Si gle people have always been forgotten tbh. The rental market in the UK is massively subsidised by the tax payer via UC. Many of the properties are owned by foreign investors so the UK tax payer is subsidising foreign investment with the amount they're shelling out in housing costs for UC claimants. It's a huge problem.

Conversations like this, instead of starting a cat fight about who has it worse, should really serve to highlight just how difficult it is to come off benefits. Unless you magically go from 40k to 120k, the middle ground is very tough for families once you lose benefit top ups.

What are your insights based upon as they are not anywhere near the reality.

DH and I have passed through the phase of struggling with high housing cost and childcare. I really think these people aren't lying they are struggling with high incomes. You are led to believe that studying hard and getting a good job, and you'll be able to afford some luxuries in life like holidays and eating out. But with houses and childcare being so expensive, it's just simply not true anymore.

If people think about a combined income of over £100,000 with two kids, they'd think they won't be needing to budget carefully. They'll have a detached house with a bedroom each for their two kids. They'll be able to afford two newish cars. They can go on a foreign holiday each year.

We are very lucky that we are a bit older and the kids now don't need childcare. We also got on the housing market 15 years ago and have got a lot of years with ultra low interest rates (except the first 2 years when we fixed at 5.99%). I despair for those younger than us. I can really understand why they struggle.

if everyone does that, then houses in the midlands would also go up in price. Look at the home counties, they are basically london prices now.

Thank God someone mentioned wage stagnation!! I was beginning to think no one else had noticed what’s happened to wages! My dh is NHS, we feel worse off than we were in 2010 that’s 14 years ago!! We had more disposable income then. His wages haven’t kept up with inflation/ cost of living. There were years of pay freezes in the NHS.

We are a low wage low growth economy, I’m not surprised that all but the very very rich are feeling squeezed.

The super rich love the middle to higher earners to fight amongst themselves over how many work lunches they buy at Prêt. Meanwhile they keep trousering more of our money and doing very nicely- banks and energy companies more recently. Record profits for both sectors - wholesale robbery from their customers.

I know. They are delusional aren't they.

I also before I got sick lived in an 85k household so I am not oblivious to what it's like to have that kind of wage as a family with childcare etc. I didn't feel well off at the time, probably even used to word skint sometimes, but its dropping down to 20k that was a very humbling experience. I absolutely was not skint then, whilst I didnt have loads more disposable cash as a family we had considerable more money to make choices for our lives such as holidays, having a mortgage on a reasonable sized house, a car, sending kids to childcare so I could keep working.
I might have similar day to day disposable cash now but I do not have any of those options available to me anymore. I think it's important not to over look the options in life higher incomes give you when considering how skint you are.

https://trustforlondon.org.uk/data/child-poverty-borough/

This is from 2021, the problem is far worse now.

I usually like the guardian but this pandering to people who've never had to do without before is doing my head in

I know that.

But when we we were leaving London, the amount of people telling us we shouldn’t, or we shouldn’t have to was ridiculous. I still have friends, struggling as we were, who won’t hear of leaving London as it’s their home. It’s just not an option.

I’m just saying that in my situation, life is 100% easier now.

@fluffykittens208 if you were having to pay £1200 pcm on nursery fees, would you be as comfortable? Or nursery fees for two children? Or reduce your hours at work to care for children? That's where the big squeeze often starts.

in my world, £100k (household income) is the minimum you need to buy a 2 bed flat in zone 3 and outwards. You may need to live at home to save the deposit and perhaps pad it with some small gifts- the odd £5k to £10k that was a wedding gift. You either go without a car or drive a very battered car that you pay for in cash for £5k (if they still do them). Holidays are ryanair flights in europe and you would stay in 3 star premier inn type hotels (4 star hotels only if you get them on a special deal). That is during the childless years though, travel is still relatively cheap.

You need to pay down the mortgage during your childless years so that you can afford childcare and you would probably need to space your children so you are only paying 1 lot of childcare. You most likely need some parental help with the childcare to cut down costs. Only when you are done with childcare can you move to a house generally in the home counties or a cheap part of outer london but then you have to budget for commute costs. that is assuming the house prices haven't gone up relative to income and you managed to pay down the mortgage.