What is considered rich these days??

[Soccermomsavestheday]

So my husband and I live a pretty decent life but not one that warrants being called ‘financially out of touch’ and ‘how the other half live’ in my opinion which is just a couple of example of my sil many comments towards us.

My husband earns around £250k a year, I don’t have to work so don’t. We live in a nice 4 bedroom detached house with a lovely sized wrap around garden. We’re lucky enough to send our children to private school. We don’t go on extravagant holidays or wear high end designer clothes etc. We both drive Range Rovers but one is second hand (5 years old). And bottom line we have worked really hard to be where we are but don’t consider ourselves ‘Rich’ more so comfortable that we can live a modest life without financial restraints

it really bugs me when she says stuff like ‘you wouldn’t know what it’s like to budget’ and ‘it’s alright for some’ etc. I do budget monthly and am very much aware of how much things costs etc

Am I being unreasonable in this situation?

I suspect the OP is talking about a normal distribution though which is likely to be part of the £250k rather than on top of. Otherwise I suspect shed have said her DH earns £350k

Same.

@answersonly interesting, thanks! Yes agree she's confused. No-one with an understanding of the sector would use the word barrister as short-hand for that set-up. I would bet a year's worth of her DH's drawings that he doesn't call himself a barrister, even to "lay people". Not least because that could be a criminal offence lol

OP said that it was a ‘bonus’ because most people don’t under the pay structure but it’s not a bonus it’s the end of year drawings so yes it’s similar as in a large lump sum of money but it’s not additional as such.

Why do you keep referring to OP saying Barrister? Why do you feel the need to keep honing in on a mistake she made in which she apologised? She admittedly made a judgement error but she explained why as many people wouldn’t know EP are ‘self employed’
She hasn’t said she is a solicitor or barrister, she would only know what she does from conversations with her DH so she wouldn’t be upto scratch. Why do you keep poking her and putting her down? Does it make you feel better about yourself?

To be fair to the OP we are a two lawyer family and I struggle to understand the equity/payment structure at DH's firm sometimes.

I did, and the partners retiring from DH's firm are. But these are large US firms (UK offices) and may have different structures - I don't know much about the operations of UK firms.

To be fair, the self-employment point had literally nothing to do with the question of, what is considered rich these days? So it was a totally unnecessary embellishment, which is what makes it weird. If you just say 'partner in a law firm' it tells most people enough to get on with, unless they're your accountant.

Yes this. Was just a bit odd that OP wanted to give quite specific details of income so we could all tell her whether she's rich or not, but then they ended up varying by about 100k pa, and her DHs job also went from one thing to quite another. When someone is so unclear/inconsistent about the actual thing they're asking it makes you wonder what the real point of the question was.

Having said that, I obviously don't actually care what OP does or doesn't think her husband's job is (as I'm sure none of us do) but have learned something reasonably interesting from other posters about this world of equity partners!

Presumably this is because in those firms you had to pay your capital contribution yourself either up front or from reduced drawings/ retained distributions. This isn't generally the case nowadays IME (since most people don't have half a million quid hanging around). It's mainly done through bank loans.

It doesn’t really matter if it’s called a bonus in reality or not. The end is the same, monthly equivalent of a 250k salary and an additional payment of at least £45k after tax.

The fees are 7.5k a term, so 45k after tax. She didn’t state it was the only thing the bonus covered, just that the payment fully covered the cost. It would be pretty unlikely that it only covered the fees exactly.

Yes, for me it was reduced monthly draw. I'll have to ask DH what their setup is - I'm pretty sure it's also continual paying in of a percentage of earnings, because when your level goes up, so does your stake and so do your contributions. Someone we know who recently retired from DH's firm several years shy of the official age mentioned being very pleasantly surprised by the size of the payout.

Not sure we've answered the OP question, but it's been interesting learning about the varied financial setups.

I think youre missing the point. What Im saying is that it is likely to just be part of the £250k that is getting paid out in a lump sum since the monthly amount paid out is less than 1/12th of the £250k. I.e. the DH is being paid £250k in total not £250k plus "bonus"

It isn't really relevant though. Point is they are not "rich" but they are certainly very comfortable.

I’m fairly certain someone would be aware of their own outgoings and accounts to know whether the monthly amount coming in was the equivalent of 250k or more like 170/180k though.

Hmm, I am not 100% because there was a lot of flip flopping, but I'm pretty sure she said the "bonus" from which the school fees are paid is on top of the 250k "income"...?

There's no point arguing since we don't know for sure but the way equity partners receive their income is extremely complicated. The monthly amount landing in the account won't bear much of resemblance to the amount the partner has been told they will (hopefully) ultimately receive

They will get a monthly fixed draw. For DH currently on c£275k this is about £9k net. That doesn't add up to £275k. The other distributions are paid out depending on how well the firm has done (and how much it has spent) once the accounts are finalised. For most firms they pay out a few times a year.

If the firm has done well the ultimate amount might be more than the £275k. If not or if it has spent a lot on other things it might be less. If it has done really badly then some or all of the fixed draw (the monthly payment.) might have to be paid back.

The OP is likely to be referring to the irregular distribution which is more or less covering the school fees. But this won't be on top of a monthly gross payment of 1/12th of £250k it will be on top of a monthly gross payment of 1/12th of a lower fixed draw amount.

Still comes back to she is not "rich" given its a sole income and he's on a 45% tax rate with no personal allowance, no employer pension contribution and on pension taper for personal contributions. They are certainly very comfortable depending on assets/debts etc.

I completely understand your explanation and how it works in your case. But I think at best you're guessing how it applies to OP.
She said - "My husband earns around £250k a year"
and later - "A yearly bonus pays for the private schools upfront that isn’t included in the yearly income. Otherwise we wouldn’t afford it so easily."

Of course it might just be that she doesn't know that the "bonus" is part of his average salary which he/she understands to be ~250k. Who knows!

well I think we know the OP is confused by it all.

I may well be guessing but this is my experience of being an equity partner in two firms and my DH having been equity in two firms. It would be surprising for a firm to be getting its calculations wrong by such a significant amount every year. They generally have a pretty good idea of what money will be in the pot.

Just to show how different they all are, neither of us ever got a fixed monthly amount. Always a monthly distribution that followed a pattern through the year, but extremely variable amounts from month to month, with larger distributions at the end of the month that ends the firm's financial year, and additionally, Dec. 31 and mid-Jan. I would say the three large distributions make up or made up about 1/2 of the yearly draw. If you're the recipient of the bonus it would be included in the mid-Jan distribution.

Yes that makes sense!

In this day and age, I don’t think you’re rich. I think you’re comfortable/well-off. It’s shocking that it takes that much money to be comfortable/well-off. These things are also relative. We all cut our cloth to suit our means and ultimately what it comes down to is how a person feels about their finances.

What you unquestionably are, however, is insufferably obnoxious and unintelligent by using yardsticks such as a wrap-around garden (ffs 🙄), the car you drive (second hand or not) and the type of schooling your children benefit from. These things are not the measure of even material wealth. Worst of all is that you had to question whether someone who doesn’t have what you have is being unreasonable in saying that in their opinion you’re rich. That’s absolutely contrary to your self-professed #bekind philosophy.

Your posts are disingenuous. Really what you’re asking is “can I in good conscience dismiss my SiL as an unreasonable, jealous, irritating thorn in my side?”. No. You can’t.

If the OP's DH in fact earns £350k every year and they live in the SW then Im changing my answer and I think they are fairly rich (albeit with chunky outgoings)

Well I think you're rich OP and I'm a lawyer too. Even if the income is only £250k you're rich. But you state that the bonus isn't included in that salary so you're even richer! Well done you.

You choose to pay for 4 sets of school fees which presumably takes up a large chunk of that but yes, you're still rich.