To Q why many high earners still live paycheque to paycheque?

[FrugalFannie]

I wanted to spark a discussion after seeing a post about living paycheque to paycheque. An interesting article I read in the ES (Nov, 2023) claimed that “Some 26% of people surveyed across the UK with an annual income of £100,000 + said they had no money left at the end of the month” https://www.standard.co.uk/business/money/26-of-people-earning-ps100-000plus-living-monthtomonth-amid-costs-squeeze-b1121031.html

Recent years have indeed been tough financially, but if you earn a relatively good or high wage, it seems surprising to still be living paycheque to paycheque. I personally don’t live this way; I’m a single woman with no children and consider myself smart with money.

I’d love to hear from those who aren’t living paycheque to paycheque about how they manage their finances. What strategies do you use? Is it a matter of being extremely frugal in this economy? Clearly, this issue affects people across various income levels, and I recognise that everyone’s situation is unique. I’m genuinely curious to learn about different financial approaches that work for you!

I have been a good earner- but always lived paycheque to paycheque. Childcare and high cost of mortgage as a single mum absolutely scuppered me. Am much better now and save every month but I get it completely.

Because they are spendthrifts. Next question

I think sometimes it depends what someone means by “nothing left over” - for higher earners that might mean after putting money towards expensive holidays, into pensions, into a house project - ie not just on regular bills

How much money do most ppl have in their current account the day before pay day? Not a lot I’m guessing.

Because they're thick as pig shit

I was fortunate to get a job that pays nearly double what I used to earn two years ago. I still live as though I'm earning the lesser amount. Rest goes in pensions and investments.

Can't understand how folk I'm this country are so poor at budgeting.

Lifestyle creep.

Mortgage
Childcare

100k salary is 5k a month after tax, student loan, and 6% pension contributions.

Its not unusual for a mortgage in london/South east to be 2k a month.
Nursery fees for two kids - another 2k.
Food & bills will eat the other grand.

Pay 10% into my pension before it even reaches my bank account and collectively my husband and i try and put 10 to 15% into savings on pay day.

I don't look down my nose at people who don't do this though. I was lucky to have money mindedness instilled in me by my parents from a young age and my husband and I have worked hard to increase our salaries over the years.

Ultimately everyone is trying to do the best with what they have and I'm not here to judge.

2k for 2 kids nursery fees?! Where is this magical place? It's double that!

Because the more you earn, the more you spend.
The people on £100k are not living in really cheap housing, shopping in Lidl, and wearing stuff from Primark.

Mainly lifestyle creep. When people earn more they often realise that they can afford more, so upgrade their car, house, ect, The only way to stop it is to "cap" your lifestyle at a stage you are comfortable with despite any pay rises, and decide that the more you earn the more you save instead of spend.

I say my husband and i live paycheck to paycheck, as we almost always end up with +/- £20 in our account by the day before payday. But we put £1500 a month minimum saving towards various things (mortgage overpayment, savings, holidays, Christmas etc.)

I'm guessing some of these higher earner mean similar.

Plus someone on £100k is likely to live in a much more expensive house and likely to live in a much more expensive area - it's all relative

Tax and deductions on everything.

It's not about being frugal.

It's about changing what we view as "normal".

I look at friends who think everything has to be new. They "do up" rooms in their house, they drive lease hire expensive cars, clothes are always bought new etc...

I love second hand, upcycling stuff, cooking from scratch etc...

I don't see it as living frugally. I see that as just normal life.

My family tend to spend our money on experiences and family fun rather than materialistic stuff.

In theory I have nothing left in my current account before pay day but that's because I get paid then all bills get paid and money is sent off to various accounts for saving and spending. Then reset to zero.

Where a person lives will have a massive impact on living costs ,money goes a lot further in some parts of the country than others

It may well depend on outgoings, cost of housing locally, but some people just are spendthrifts.

£150k a year will go an awful lot further if you can buy a nice house in a nice area for £350k and don’t have childcare costs.

Compare that with a 2 bed terraced house at £650k, plus a 2 year old in full time childcare….

Bit harsh

Up until now we've always spent up to and beyond our very decent household income. We've had lots of wonderful holidays and fantastic experiences. I regret absolutely nothing! Mierhage is now paid off. We've been lucky to have decent pensions (although mine cost 16% of my wage). You can save and save for the future but ultimately nothing is guaranteed!

Lifestyle I think. People get all sorts on finance and want the new everything.

I just learned to budget at an early age. DH and I are both on high incomes and have kids. We just budget what we spend without going into overkill. I might splash out and spend £300 on a dress if I want it, but most of the time I'm happy with Vinted or charity shops. We cook from scratch which is cheaper; I had a party a while ago and bought pre-packaged stuff. Cost a fortune.

We're mortgage free now(we got lucky), but beforehand we still had money left over. We don't have a picture perfect house that's all shiny and insta-perfect. I've known people to spend a fortune on house stuff and neither of us can be bothered. We like second hand and vintage stuff. We mainly decorate ourselves, too. Don't see the point in hiring someone to come and paint the living room when we've got a pair of hands each. Cars aren't new and fancy.

It's not necessarily a conscious choice not to go and buy these things; it's just not the sort of thing we're interested in. I suppose if people are, it's different.

DH and I are reasonably high earners, him £70k and me £60k, plus £20k bonus that goes straight to savings and holidays.

Our mortgage, commuting and childcare wipes out a lot of our earnings. We shop on Vinted for ourselves and the kids, we aren’t excessive with shopping ie it’s Sainsburys and not Waitrose, we have a five year old car, we have the odd meal out. We do live to our means and are down to our last £30 or so in current accounts.

We don’t live the high life that people expect!

I think it's called "living within your means". So if you earn 25k, then you live within that, if you earn 125k then you live within that. Everything is relative depending on your income and outgoings...

That’s a good phrase for it.

They have huge mortgages and live beyond their means using credit cards.

I think for some people they have an expectation of what lifestyle that sort of salary should provide and so they try to live it, without recognising that they probably need £300k to live the life that £100k bought 10 years ago. Not sensible but somewhat understandable