Meet the Henry- High Earner not rich yet

[Ontobetterthings]

This was a very interesting read about a man who earns 100k but struggling financially working in London. After doubling his wage to 100k with inflation costs he is only 6k better off a year.

https://www.cityam.com/100k-isnt-a-big-salary-and-we-need-to-talk-about-it/

I can believe 100k salary in London is a struggle. Aibu?

Sorry, we bought for 300k zone 3 2014, no family help, apart from DH's Dad helped with some DIY as it needed quite a bit of work.
Brother bought in 2012, again no parental help apart from with DIY, and I think my parents bought him a fridge and a cooker.

So in 2014 Henry was earning 50k. Did you and your husband need a 5.8 income multiplier mortgage to buy in 2014 (assuming a 10% deposit)? Was that something that was even available to Henry then?

Or are you saying that Henry would be able to buy that house now? How much of an income multiplier and how much deposit would he need now as a single man on 103k?

I'm sure he could have bought where your brother bought, but your brother being frugal enough to be able to buy on minimum wage only even then was unusual. It's pretty impressive him managing to do that.

Not to mention interest rates in 2014 were 0.5%!

I sympathise to some extent with the boomer/gen X/whatever generations who benefited from a strong economy and house price growth.

The equity effect is multiplicative of the effort they put in.

So they probably have peers who didn't work hard and didn't sacrifice to get a deposit and didn't save their money and be frugal, etc. And they can see that those people are really struggling, and they're glad that they themselves put in the effort required to buy a ticket onto the housing train, and insulted that people are saying it was a free ride.

It's just that replicating that success means replicating BOTH the initial effort (buying the ticket) AND the multiplier (how fast the train is going).

I get it but also, when I was younger I used to spend lots (relatively considering my first job as a graduate paid under the tax threshold 😆) at the pub and eating out. I rarely do either now ( I earn more than 5x what I did then) because I have other priorities. I could say how unfair it is that my quality of life has gone downhill but it doesn't feel like it has. I have no desire to spend my money like that now.

It's fine to say 'I'm a high earner I should have loads of cash' but with that mentality also comes actually spending money on non important stuff just because he feels like he should be able to afford it.

Thank you for your honesty @Bushmillsbabe, however I don't think examples from such a long time ago are relevant today. If Henry could buy now, it's got nothing to do with what people in a totally different environment (and twice the personal allowances in one case) were doing. It's not just price relative to earnings but also things like student loan repayments.

There's also a 3rd group. Peers of that generation who didn't have to work or sacrifice any more than the average, aren't struggling and are instead sitting on piles of unearned equity through nothing more than good luck. I agree though they don't particularly figure in the thoughts of those you mentioned.

They’re group 1.

We had help to buy to get on the ladder as we are Londoners - cash gift and lived at home for low rent. If we were renting the house prices would have climbed away from us.

We sold that house a couple years ago for 420k, after doing a lot of work to it - new kitchen, fully gutting and redecorating upstairs, some rewiring, redoing garden. So that would be an approx 3.5 multiplier with a 42k deposit. But he could buy a 'doer upper' in same area for less.

Yes minimum wage, but he did a huge amount of overtime to save the deposit.

I think the word "wealth" is perhaps used differently by different people. It has a connotation of "vast riches" but often also just means something closer to "positive net worth" or "assets on the balance sheet" or similar.

Some family cultures/norms are more geared towards generational net-worth thinking than others, even when we're not talking about vast riches. For example, is it better to encourage your kids to stay home and save for a house deposit, or to encourage them to be financially independent and stand on their own two feet? What do you think of retired parents spending money on cruises while their children have credit card debts - their right after a lifetime of hard work, or financially inefficient looking at the family as a whole?

@Bushmillsbabe is using generational thinking when she says she's not taking her inheritance for herself but for her 26yo DC (if I'm thinking of the right PP). Just because a family doesn't have Duke of Westminster levels of wealth being passed down doesn't make it "not generational wealth". I'm not saying it's a bad thing. I think families who do this will be in a better place in 50 years time (whereas perhaps in 1950, families who encouraged DC to go and make their own fortunes in the post war boom might have done better).

Unrelated to the current thread of conversation: I'd definitely watch a "When Henry Met Ethel" romcom, lol

This is the downside of living in London.

My DH and I earn half that (and then some!), often shop at Waitrose or M&S, own a nice 3-bed semi in a nice area, and go on at least one fortnight "abroad" holiday a year, sometimes more.
But we live in Northamptonshire.

Thats not me, my 2 are still in primary.

And I would love nothing more than for my parents to be able to enjoy their money, they have worked long and hard for it, much longer than should have worked due to Gordon Brown's pension raid. I neither need nor want their money, if we did by some chance inherit anything I would pass it straight to my daughters. I suggested they downsize and use the difference to do some lovely holidays whilst still able. If the government is going to take their house money, it's better than it's less rather than more.

But their mindset was to save and save as they didn't want their grandchildren to struggle like they did. I keep telling them that my girls have every advantage- they are smart, attend excellent state schools,supportive parents etc, if they don't 'make it' then that's on them.

That wasn't how I read it but maybe didn't read closely enough.

We are wealthy, self-made, I recall dh feeling like a Henry 20 years ago and I think we had low assets compared to his peers.

We worry about our kids relying on us to support them - not feeling motivated to work as hard as they should. We want them to be financially independent because we feel that's important for them. It's that fine line between supporting them and doing that bit too much so they don't feel inclined to do enough for themselves. They are living at home, saving for a mortgage - we do not charge them rent but they are expected to take advantage of this and save - if they use this situation to live the "high life" we will ask them to move out. Everyone needs a reason to get up in the morning.

Money culture is a funny thing - dh's sister expects us to finance the larger family - I don't think that's on us but my siblings have all worked hard and are also wealthy, dh's are not and so maybe that colours my thinking. It's very likely he will refuse the small inheritance he is due and give it to his siblings.

Sorry, mixed you up!

I keep telling them that my girls have every advantage- they are smart, attend excellent state schools,supportive parents etc, if they don't 'make it' then that's on them.

But coming back to this - in other words, what you're saying is that you believe your girls will be able to efficiently convert their intellectual/educational/social capital into good incomes which will allow them to build hard financial capital, so your parents don't need to bother giving them financial capital directly?

I think whether they (and their generation) will be able to pull that off is the central question raised by the "rise of the Henries".