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!

For us it’s nursery fees, high mortgage, and lifestyle creep. We started buying a few nicer bits once some funded hours at nursery kicks in and it’s amazing how used to that you get, we could tighten up if we needed to but just got used to buying slightly nicer things from the supermarket for example, eating lunch out occasionally instead of packing picnics

I live like this on a 65k salary, honestly I can't see what I would need to save for! But I'm single with no kids.

I have a small mortgage and no debt and I save for specific stuff like a new car or a holiday, but once I've saved for it and buy it I'm back 0.

Basically if I got so ill I couldn't work long term, I would need to quit my v expensive hobby, sell the horsebox/loan out my horse, I wouldn't be able to go on holiday etc. So all the money I spend on that could be repurposed. I also have spare room and so could easily take a lodger again to pay 50% of my house expenses.

My job is extremely secure in a very safe industry (pharma). I haven't ever been unemployed in 20 years. If something expensive happened on the house, say new boiler 3k I'd pop it on my interest free credit card and pay it off over the 20 month interest free period and just skip a holiday or eat out less.

I do pay into a pension at 8%, but as someone who likes active/adrenaline stuff I'd rather spend my money now living life to the full, rather than save for an amazing retirement when I may not have the health to enjoy it.

Time poor….long hours….turns into take out /eating out as exhausted. Running a larger house with bigger bills, tax takes more than people think too.

Our household income is 150k. Don’t have a massive mortgage- 1k a month. Most of our money goes on running a big period house and on kids education and extra curricular activities. So if we wanted to could just not send them and would have loads of money.

we have very little left at the end of every month and earn more than £100k, however our mortgage is £2,800 pm and we save £1400 pm for bills and holidays, so that's £4,000 of the net take home

Not sure if someone has already mentioned this but taxes are really high.

And like people have said before. Mortgage rates are pretty high even on a modest semi if you live in South East.
Nursery fees are high and you don't qualify for free hours/funding.

Commuting costs are high

Job is likely stressful so you want a holiday or 2 per year.
Pension payments take an extra 10%

Rainy day fund

Bills

Loss of tax free allowance if you're over $100k

No child benefit

All of a sudden that high salary isn't so high anymore and the difference between you and someone receiving free childcare, child benefit and UC isn't so huge, yet the whole country hates.

Because apparently you're rich.

I have money left now but a few years back I pretty much live pay check to pay check.

e.g. when I earned £250k a year I only had a few thousand saved, everything else was spent (mortgage, school fees, holidays, eating out, clothes).

Basically I just like nice things and think life is for living.

I know several who do the latter two, if not the first!

stagnant wages, inflation & money doesn’t go do far. A lot will be housing costs, someone who earns more than me but has less left over isn’t necessarily bad with money. They just might be younger and renting.

The people on £100k are not living in really cheap housing, shopping in Lidl, and wearing stuff from Primark.

People on 100k definitely shop in Lidl and Primark!

Just look at nursery fees, love 🙄

We live pay check to pay check. We didn’t start this way, but we made long term financial commitments years ago when we never thought the UK would flatline economically for 16 years. After committing to a large mortgage and private school fees for two DC’s secondary education, school fees have rocketed and will soon rise by 20%, the mortgage has doubled. The low emission zone forced us to upgrade from our old diesel. Taxes have creeped up, I expect more hits come October. Inflation hit us all.

Luckily, we were conservative and made sure we had head room before making these commitments a decade ago. But we are now just about out of wiggle room.

We both work, and as the DC get through education and we pay down the mortgage, there is light at the end of tunnel. We will end up with a paid off house and we have been making pension contributions, so we will be fine in the ling run. But cash flow is tighter than we imagined it would be.

I earn less than 100k and take home more than £5k after tax & 8% pension is deducted.

I have friends in London who pay almost £2k per child in nursery. If you have two pre schoolers and earn more than the free hours threshold, it's feasible that after childcare and London mortgage costs, you have hardly anything left

My DH is on around £100k and I work p/t so I earn between £10-£20k. I know that’s a much higher combined income than many people but I can honestly say we feel skint at the moment! Certainly less well off than we were say, 5 years ago when our income was less.

Mortgage has gone up and is almost £2k, we’ve had no holidays in 2 years and are O/D mid-month. We don’t have a penny to save. Shop in Lidl/Aldi, I’ve bought no new clothes all year, kids have only had essential items.

Yes, I know there will be posters thinking “boohoo - I earn far less and manage, get better at managing your money.” I feel embarrassed that we’re living this way when our income is good - I just feel like everything has got so much more expensive.

My DH is on around £100k and I work p/t so I earn between £10-£20k. I know that’s a much higher combined income than many people but I can honestly say we feel skint at the moment! Certainly less well off than we were say, 5 years ago when our income was less.

100k is the equivalent to 80k 4 yrs ago

Mortgage, childcare, school fees, holiday home, holidays…
with cost of living so high at the moment we all feel that the lifestyle we are used to is now very expensive. It might have felt like a lot of money once… but not any more (and yes, most people have less and don’t feel sorry for higher earners, and they are not starving)

If you have a more expensive house, more expensive car, more expensive schools, more expensive holidays etc it will use up the higher wage in the the same way that the less expensive items will use up the lower wage. It's not rocket science.

I'm bad with money. Spend way too much of it on 'stuff'. I actually spend less now than before (say 10yrs ago) so it's not necessarily life style creep. I can afford what I buy I guess but most of it is probably not necessary. Would have more money if I practiced restraint. But the stuff makes me happy (not just short term happy). No debts though except hefty London mortgage.

Its not unusual for a mortgage in london/South east to be 2k a month.

^ and the rest!

Mine was because of the industry and company we was with and what we did and from what we got told about how our part was doing well, we presumed we would be in business for years then it was nice to be earning a good wage and the freedom, although in hindsight i should of presumed and saved instead but at least for me now, its lesson learned.

I earn over £100k. The whole lot goes on the mortgage at the minute as interest rates are so high. We live in an expensive area and have a 90% mortgage.

Everything else is paid for by DH's minimum wage job.

Mortgage, insurances, tax, bills are all through the roof.
Food prices have gone up, cars need petrol, school are constantly announcing themed days, activities and events/clubs which swallow a fair amount and then on top of that, we choose an easy life over a cheap one so we have a cleaner.

We live paycheck to paycheck but we thoroughly enjoy our lives.

Well then do it? Go on I dare you.

Of course you'd have to give up your career that I assume you worked hard for and the sense of accomplishment that provided....oh and your apartment too as those on benefits don't receive money towards a mortgage or get to be choosy...but it's OK as you'll just ask the council for housing except....ah, you're in London you say? Still, housing benefit will pay for a private rental except...

local housing allowance only covers on average a third of rental properties and of those properties only a handful will accept benefit claimants but probably not the kind that 'choose it as a lifestyle'...and maybe not in an area you'd like...

ah well, temporary accommodation isn't so bad and at least you'll be able to save for your kids private education without housing costs...that'll help to get them out of the poverty trap...what's that? After £6000 savings they start deducting your uc and after £16,000 you're entitled to nothing? And after your kids have grown up and left you'll be left with standard single person uc with no secure housing, no work prospects, no private pension and no safety net?

As I said, go on, I dare you....

We have friends in that situation. Average house but in London, twins in nursery which costs a lot more than £2k.

They'll be ok in years to come, but at the moment they're spending more than they earn on an average house, childcare costs and the usual bills.