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 expect because their outgoings are large like their incomings.

In particular mortgage and childcare perhaps.

They probably have huge cocaine or gambling habits or like Huw Edwards spend 35K on dirty pics of boys wanking off...

I am a low earner but even I manage to put away a little something each month and have a nice cushion of £700 put away.

I like buying nice things. It's as simple as that really.

No they're not.

I'm one of them and definitely not fucking thick. Live in London, childcare for twins, we get a 2.5% discount for the second child. Mortgage rate rise.

No. Not thick. I think you are for not grasping that.

Why is everyone assuming these 100k earners are single parents?

There's likely either another parent earning, or a SAHP which means they're not paying out 2k a month in nursery fees.

No I’m not assuming that. What makes you think I am? We have savings, we’re just not currently adding to them. We do have financial security – we just currently live paycheque to paycheque.

I'm a high earner (240k plus) and have nothing left over at the end of the month. Pensions, two mortgages, two sets of private school fees, 4 sets of private music tuition, rowing, indenting, swimming, we take part in triathlons as a family so that's expensive. We don't have expensive foreign holidays though, never buy new clothes, cars are over 15 yrs old.

Fencing! Not indenting.

On paper my income is huge, but taxes, 2 ponies plus private school plus other extra-curriculars for my kid and I never have any money left over 😣 but I am terrible with money

Personally not thick as shit or lifestyle creep.

I feel like I should make every single pound work. So if I am offered a tiny % on savings versus paying down debt at 3%+ then the best use is paying down debt.
I obviously have a pot of minimum savings and pension payments, but other than those and bills, will Syphon money off to debt pay down.

I think what some people on this thread maybe are missing about high earners who may live paycheque to paycheque is that they almost always have a combination of savings, investments and a good amount of equity in their home. Therefore commonly have financial security regardless.

Do you actually think that you'd be better off on around £20k a year and at the mercy of a landlord?

It isn't a surprise that if you spend money, you then have none left. People are saying that they don't live the high life, while saving/holidays/hobby spending is more than the majority earn. These threads show that you don't have to be bright to get a well paying job.

Lots of reasons;

Buying a house they really can't afford and having huge mortgage payments.

Expensive cars, clothing, furniture and electronics.
Also changing them when they are still in good condition, but they just get bored with them or think they have to get the latest design. So many people, for example, have to have the newest phone/tablet/laptop and change them at least yearly.

Going on expensive vacations.

Insisting on "updating" homes that are in good shape but just out of fashion or not perfectly suited to your taste. This attitude is pervasive thanks to all those renovation shows.

Legal bills from long, drawn out divorces.

The cost of child care.

Impulse buying.

Frequently eating out rather than cooking.

Alcohol. If most drinkers were to tally up the amount they actually spend on booze per month (in the pub, at home, in restaurants) they would probably be shocked.

Entertaining a lot. Again, if you tallied it up the numbers would probably suprise you.

Going to a lot of concerts, films, and other events.

Spoiled kids. Buying your kids practically everything they ask for.

Mortgage, childcare, people saying they live 'paycheque to pay cheque' but actually that's mainly because they put a grand a month into savings the day they get paid and then don't consider that money spendable..,.

People consider things in different ways. Let's also not forget lifestyle creep, the more you have the more you spend

Because it’s one wage so we are significantly worse off than if we had two threshold wages. I’m too unwell to work yet got declined for PIP. We have lost our child benefit but still have the same outgoings as when I was working too.

What sort of mortgage is someone on £100k getting? I bet it isn't for a shared ownership place for £125k.

Nope, but then you look at where a lot of people are living and it may just be a 3 bed semi for £800k. Its all relative

High earners “essentials” are other people’s luxuries:

• private school fees
• cleaners and dry cleaners
• large mortgage and bills for a large house
• expensive groceries from Waitrose

The above are totally unobtainable for most people but for high earners they’re just “bills and groceries”.

Because they buy stuff, that’s why.
I have a friend who earns well, as does her husband, probably about £150k between them. They’ve bought a massive house, they buy a new car every couple of years, they have lavish holidays, fancy meals out etc. They live a very nice life. But it comes at a price, so they live paycheque to paycheque.

People I know in that sort of salary have generally stretched themselves with large mortgages and extension work to get a nice house (SE - expensive area). They still have kids at state schools and go camping on holidays. We have saved as we have a grottier house, though I'm beginning to regret that 20 years later.

It's pretty typical that as your earnings rise, so do your outgoings. You might have a bigger mortgage, spend more on hobbies and interests, pay someone else to do the things you don't want to spend your time doing. Enjoying your increased pay.

Nursery was £2k a month. Mortgage nearly as much on a two bed terrace (South East for work). Single parent. I was on a good salary but it had to stretch.

Often times they buy houses that push then to the limit rather than leave any room for comfort.

It's a choice that some are happy to make.

Cost of living in London pretty wild if you don’t have massive amounts of equity in your home.

Normal among my friends to have a £3-4k mortgage and £3-4k childcare costs.

That’s potentially 2x £80k incomes spent on just on those outgoings.

These threads literally blow my mind.
Always always get the posters who spend absolutely shit loads on none essential items and then try to justify that it's actually unfair that they have no money left
Complaining about lack of holidays and being stuck in a vicious cycle. Even saying they'd be better on off benefits. All whilst paying shit loads into their pension, seriously overpaying their mortgage and spunking a grand a month on a car! But saying they have to do this because of the government penalising them.