'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.

I would never assume someone on a good salary has never gone without. Most people earning these salaries were not born with a silver spoon in their mouths.

Let's not fight among ourselves but turn our attention to banks and energy companies making record profits off all our backs - most of us will be lucky to see a few quid in our meagre pensions for it, if that - and the people who have facilitated the wholesale robbery - the government.

@Foxesandsquirrels I'm saying what I see in my area with people I know. All are home owners, so I can't speak for renters, but I live in an expensive area and that's what I see.

Some people will never understand what you are saying because they have never had to live it. Some are tone deaf.

Do you have savings?
Do you save each month?
Do you have good pensions?
How many cars do you run?
Do you have holidays?
Nice meals out?
Days out?
Do you have a decent amount of food shopping each week?

My DH and I are both NHS employees (not doctors) and we have been crucified by years and years of NHS pay freezes whilst COL increases. Absolutely crucified. We're on our knees as a result. Doing incredibly draining jobs, and having over a decade of pay freezes which equate to pay cuts in real terms.
It's affecting both of our mental health now because we work so hard and are so dedicated to our professions, yet we are struggling horrendously financially due to the government imposing pay freezes on our profession for 12 years.

£1200 would probably be fine, would just reduce the mortgage overpayments.

Nursery fees for two children would be unmanageable. But its why i live near my MIL (albeit in a flat) in hopes of saving some money, she has kinda agreed to help. Like i said, I am lucky. People outside london wonder how we manage on £120k but i tell them that marrying a londoner is like marrying someone with a £40k gift from parents , more when you consider the childcare.

I mean sorry but if this hasn't got Reform UK written all over it what has? You are honestly suggesting the shift of assets to the very wealthy is going to benefit the people on the bottom income bracket? Even though you are indifferent on this (likely story) it is effectively giving a voice to those people and this is what the middle classes are whining about? Yeah right, we are all going to be poorer except the very wealthy, they will be buying up everything and the rent rates will be at their mercy, hardly beneficial for the poorest members of society. The rebalance is and will continue to favour the very rich, no one else!

Totally.

Deflection

the part i agree with is that family will be more important to people who are not in the top 5%. We wouldn't have the luxury to go NC or sadly even to leave a partner that we are no longer in love with. We may have to follow quite a rigid timeline and not make any mistakes if we want financial stability i.e. partner with reliable guy with good income who has inheritance or local parents, stay at home for as long as possible to save, stay near parents to get some free childcare, space out children etc etc.

That is if we want to live a life with some luxuries and not just struggle.

Or didn't realise the Tories would trash the economy for everyone apart from their rich mates.

Exactly!

It is so difficult to read all this misinformed crap!

Like Brexit these people don't have your interests at heart, of you're renting even less so, don't listen to the propaganda! How are you going to be richer if nobody has any spending power? Nobody has answered this.

most people from ethnic minorities vote labour. it is white old people who vote tory.

The young people who can cope with london costs (i include myself in this as I am married to one) are second generation or third generation londoners from immigrant backgrounds where its still very acceptable to live at home as an adult, where divorce is not as common, where university education and getting a good career is very important.

1. This is not what I said.
2. I am from a single parent working class immigrant household, I wasn't born in this country. As I've pointed out in other relevant threads since I've been here. On a personal level, I think it's good that the lower economic classes and immigrant groups are getting a greater share of the national discourse, but overall I am neutral as I said (neutral not meaning the same thing as 'indifferent'). The history of human society if about shifting power dynamics, it is what it is.
3. For all his failings, Boris Johnson understood this shift a few years ago and that's why his 2019 GE campaign focussed on it and was so successful. Kier Starmer gets it now, which is why we're seeing so many noises out of Labour about economic prudence and Labour being the 'party of work' (well, d'oh, Rachel Reeves). This will help Labour to win the next GE, which, if I may be allowed another personal view, is a good thing.
4. I don't know much about the super wealthy as I don't know any of them. I think the bigger issue we have as a nation is the number of listed and private British businesses being sold to US and Chinese private equity, this has kicked up massively since about 2000 and accelerated again in the last 5 years. It's really bad for our economy and productivity, innovation and jobs.
5. We're just having a conversation on this thread (or at least, that's what I'm doing) so there's no need to case aspersions on my supposed motives for my humbly held opinions. I've got as much right to say them as you :-)

I agree with this. I had my child as a solo mum 18m ago. When I got pregnant I had done my sums and knew I could afford it. Things would be tight but I was desperate to be a mum and having had cancer meant it was now or never for me.

I earn £72500 if I work full time. That is a take home if £4000pcm. Full time nursery fees are £2221pcm for a full time place.
my mortgage on a small 2bed flat in zone 3 was £1475pcm (redeemed from help to buy).

I couldn’t afford this. So I didn’t redeem. I bought a shared ownership flat with a much smaller mortgage. I get my rental part paid if I am on universal credit so I cut my hours time 2 days a week. This means I also get 85% of my childcare paid (so I actually put my child in for a third day to give me time to batch cook, clean and go for a run etc)

I get £2053pcm (after deductions) for x2 8 hour days. I get £2335 universal credit. My mortgage is £647. My nursery fees are £1440.

it doesn’t make sense that I can do this. I should be being supported to work full time and have a mortgage not have my rent paid and supported to work part time but I am actually better off working 2 days a week in shared ownership than working 5 with a full mortgage.

Oh, bless. Poor little things. Only the equivalent of well over double what others earned.

And how do you think it will look for you in ten years time? If you are on a low income it won't be rosy!

I think some posters are missing the point. It’s not that the people on these incomes are struggling - they’re fine - it’s that these incomes sound high (confirmed by most people on this thread), but actually they don’t mean you can live a life of luxury because the COL has massively increased.

A salary of £100k sounds, and is, huge, but the reality is that if you live in London on this salary in an average house (say a 3 bed terrace, bought within the last 5 years) and have 2 kids in childcare, you will have a similar or worse lifestyle in terms of disposable income to someone on about £30k in the north.

You will be paying massive amounts of tax, you lose all child benefit and help with childcare costs, and you most certainly won’t be going on multiple cruises, putting your kids in private school or crying over your diamond shoes like pps are suggesting.

The idea that people are to be blamed for being over leveraged when that is literally the only option when houses cost 20
times an average salary is ridiculous. The only people in London who aren’t over leveraged are those who (a) bought about 20 years ago, (b) were gifted massive deposits from family, or (c) both.

Im a lawyer and when my boss was at my stage in his career, he owned multiple properties, had a stay at home wife and 2 kids in private school. I earn an equivalent salary now but it gets me a very modest lifestyle where private school is out of reach, small house with big mortgage, DH and I both work full time. It’s the change in buying power that people are complaining about. It affects everyone.

Agreed. A lot of people on benefits or ‘low incomes’ with low housing costs have much higher disposable incomes than apparently higher earners. There are also lots of posts here implying that if someone is on double their income, they have double the amount to spend.

Simply untrue. Taxes for those on 50k+ are really high so that thanks to the Tories extra work means little extra income, particularly for families. This is terrible for the individuals and a disaster for the country as the incentives for productivity and growth are not there.

It's housing and childcare that are the killers. There is a limit to how far you can compromise for a smaller mortgage when you need to both adequately house your family and live a reasonable distance from work. Our childcare bill if we both worked full time would be over £3500! Mortgage on a very ordinary 3 bed £1700. There goes all your money. "Struggle" doesn't have to mean on the bones of your arse. I don't think it's wrong for higher earners to expect a higher standard of living, otherwise what's the bloody point.

Yeah - I hear you, loud and clear, appear to revel in the downfall of the middle classes, with seemingly know insight to how the economic situation impacts everyone. You appear to be knowledgeable and 'neutral' (of course) about Quantitative Easing but have made a fictional and bold assertion that the poor will be empowered? Really do you really think that?

As an immgrant I do agree with you that what I might call 'immigrant values' (keep family close, value education over everything, focus hard on your career, be wise with money) will stand people in much better stead than the consumer/leisure/disposable capitalist mode of life that's been sold to us since the late 80s.

I would also like to add that not all immigrants have these values and not all 'native' (insofar as anyone in the UK is truly native apart form, I guess, some people in west Wales) lack them.

i saw a flat on rightmove where it was clear that the owner had it gifted to her when she was studying in UCL (she lived there with her uni friends, her sister and then her dh). She lived in it from her uni days up to the time she had two children in bunk beds in the second bedroom. It was in Russell Square but come on! You wouldn't usually expect educated professionals from rich families to do that.

If even those from rich families are doing that.... She must have saved a lot of money. It made me feel a bit bad about wanting to move out from my flat (similar size but not in russell square), when i have no kids yet and she had two babes in it!

As a DINK in the North with household income in the region of £150k, I think these articles are insane and show the middle class have lost touch.

We’re not rich, but can buy anything we want that’s priced at <£150 without having to think about budgeting.

We spend £6-7k per year on holidays and £10k+ on home improvements and manage to save about £10k a year so could cut back significantly/have a lot of headroom.

Our mortgage is about £250k but we could (at a stretch) afford to double that and so could also live reasonably in the South.

That said, I do genuinely think I would struggle to live on a household income of £60k, but that’s more because the decisions we’ve made weren’t based on that and so we would have to downsize and overhaul our spending habits.

Surely people on 100-120k are squeezed by HMRC because they lose all benefits and the personal tax allowance.

Childcare should be free for all so everyone can work if they want and progress, and young people should be incentivised to have children whilst relatively young still, if they want to. Every bit of work should be lucrative for the person working.

All well off old people should pay some inheritance tax to make things fairer and pay something towards the NHS when they die. We all use the NHS extensively when we die - most of the life time spend by the NHS on each of us is in our last few years/months of life.

Society is skewed because we have too many old people and the politicians do what they want. When all the economically productive young leave or refuse to work (already happening) we are screwed.
It isn’t a class problem anymore, it is a demographic. The young can’t see a future because we Middle Aged and elderly have hoarded everything. There has to be a rebalance.

The real divide isn’t achievement/education anymore but between those who inherit/get help onto the ladder and those who don’t and that is utterly demotivating for all really. Those who get the help also don’t see the point in working more if most goes on taxes or childcare. Another reason many don’t want to have kids anymore or just 1.

There is no way round - we have to tax assets/inheritance for all but in a way that is easy to administer.