To think that on higher incomes, having no money left often comes down to spending choices?

[ThatGoldZebra]

Sometimes when I hear what people are earning, I’m surprised when they say they have no money left at the end of the month.
I understand that everyone’s circumstances are different but at a certain income level it feels like spending choices and lifestyle play a big role. AIBU to think that?

Ok, I'll bite. Single earner household, £125,000 gross salary. I think we can all agree that on paper that is pretty decent. £500,000 mortgage, buys a pretty ordinary house in this day and age anywhere that is near high earning job locations in general, 2 children under 5. Figures are estimates based on quick google, except net monthly income which is a calculation.

Monthly net income £6,504

Mortgage £3,000

Childcare £80 per child per day (lost all help thanks to cliff edge) £3,520

Oh. there goes £125k p.a. with nothing left.

Yes, childcare won't last forever, yes perhaps 2 children might not be there at the same time, but aspects of this scenario are experienced up and down the nation.

Even with 1 child at nursery, we're still only looking at £1,744 to pay council tax bills that now seem to top £300 per month, food, utilities, cars, clothes and so on. You'd think they're rolling with the big dogs, but the tax traps and childcare cliff edge pushes them close to the edge when their success should really be rewarded with some degree of discretionary expenditure that ultimately provides jobs and economic growth. Without discretionary expenditure, we're all trapped in a self-fulfilling doom loop.

Jesus! That mortgage!
Even when interest rates went daft mine was never more than 650 for an ordinary house in the North.

And reading that, who would ever choose to have kids.

In all seriousness, thanks. That makes it all make sense.

I think the north / south (east) divide is becoming super apparent on this thread.

Single earner households have it rough and people don’t realise. Talking single parent rather than one earner and a SAHM, as the SAHM family won’t have your childcare costs, and probably will spend less as some one is home to do cooking from scratch and cleaning themselves.

One x personal allowance and tax thresholds - that’s a huge amount less you’re taking home than two people on £62,500 each. If someone said “DH and I each earn £62,000” people wouldn’t think they were high earners especially and yet they’d have more money.

Your council tax is only reduced 25% so you’re paying more there than each person in a couple

The couple on £62,500 each? They get a bit of child benefit too! Not all of it I don’t think but some.

Your bills, including nursery, are all on you to bear. And the couple aren’t over the cliff edge for nursery.

Self catering holidays? Well you’re going to pay the same amount as a couple because you still need the same number of beds.

Yeah but unfortunately I’m stuck for now whilst the children are at school as exh wouldn’t leave this area (outer London) and also once kids are in the later years of secondary school it’s a big deal to move them.

£3k a month mortgage is ~£500k of borrowing. Which buys a very ordinary house in the South East.

For £650 a month you could borrow £110k over 25 years. That wouldn’t buy you a house in nearly every area of the UK at today’s prices.

Can get ordinary house for far less than that

3 bed here in SE

And all our friends are here. DH's job is pretty tied to London as there are kids more jobs in his area of work there. Once we have moved out the safety net has gone.

People in generation above us and one prior to that had to emigrate to get jobs and a decent lifestyle.

FIL had to work aboard as a builder in DH childhood as that's where the work was.

We couldn't afford to live where I grew up - it's to expensive in that part of midlands London communtable - siblings have stayed and are in HA housing - we've moved where the work is and married up house costs and work.

It's a choice to stay where you were born - it often doesn't feel like it but it is. It's choice to move for work - one with consquences like loss of social networks.

Our big choice was to have kids and as many as we did - that's massively impacted on our lifestyle - was still a choice. Problem is over course of their lives other things like food and heating have got more expensive relative to wages - the rate of which has been faster than we expected.

Other things like swimming - we learnt through school by time our kids got there it clearly wasn't going to happen like that for them so had to pay for expenisve lessons or let them not learn how to swim. Same with music lessons - mine in school were free or mininmal payment - DC it just went up and up and we finally gave up when they then insisted it couldn't be in schools and we'd have to travel to their site.

The goal posts moved on us in many ways and once kids are here you do have to do your best.

We've moved round to make most of our opportunties - we've got kids through most of their education - and should be near bit of life were we build savings and when our parents started doing more fun things but finacially we feel as tight as ever.

Generation above DH work had much more lavish lifestyles than we've manged often with same or more kids as their wages bought more than ours have.

Absolutely.

Age and stage also quite critical - people don’t realise the cost of buying a home in the last few years plus of course the cost of childcare.

An - the impact of the higher tax rates plus student loans plus loss of benefits on your overall net pay.

With all due respect to those that work hard and haven't had the best of opportunities, if someone earning £125,000 p.a and well within the top 5% of earners is being told to buy that place, as a nation we're completely fucked.

Depends where you live tbh. And not everyone can just move. 2 bed terraced house on my street, on the market for over 300k at the moment. Mental.

The more you earn, the more choice you have. So yes, if you're spending all of your income then it's because you've chosen to as you could live in a smaller house, in a less expensive area etc etc.

But why is it a problem for people to spend their money?

I'll bite.

Call me entitled but I dont want to live in that house or that area when earn well north of £100k and worknin london. I have lived in houses like that and was grateful and happy for it. But not now.

So yes, I will choose less disposable income and a nicer house. Mine isn't luxurious or fancy and is not in a fancy area but its a lot nicer than that.

Quite. Imagine PP makes a strong case and all 6figure earners move to Basildon.

Where do local Basildon teaching assistants, carers and retail staff move?

Particularly housing, but also a lot of living expenses becoming out of reach even for higher earners is indicative of a bigger society problem.

All depends on priorities and where you are in life.

£150k will get you a beautiful 3 bed stone semi with countryside views round here but you'd be sacrificing the benefits of living within spitting distance of supermarkets, cinemas and easy transport links.

Can you share a link to this property so we can look at it properly.

Searching for three bed houses in Loxford the cheapest on rightmove is £330k and looks semi derelict inc boarded up windows.

After that they’re £450k+ - not far off that £500k figure or mortgage payment.

People who are struggling are often angry at the wrong people.

There’s this automatic resentment towards higher earners, like they’re the problem. But a lot of them are paying a huge amount in tax and n many cases they also take pressure off things like the NHS or schools by paying privately.

It doesn’t mean everything is fair, and people have every right to feel frustrated. But aiming that frustration at individuals who are just earning well doesn’t really get to the root of the issue.

The reality is the cost of living affects everyone, just in different ways. If your bills go up by £500 a month, that hurts whether you earn £30k or £150k. The lifestyle looks different, but the pressure is still there. Earning more doesn’t make you immune to rising costs, it just changes the scale of them.

the impact of the higher tax rates plus student loans

That worries me - few years into work I manged to pay minimal undergraduate loan off and master loan off - from monthly wage I save from 1/3 - paid rent 1/3 and lived on rest.

The rents have doubled or even tripled the wages from same jobs haven't - and the loans have massively increased.

We were a decade later than our parents house buying - as it took that long to save a decent depoist and get settled with work - we were early 30 as oppose to their early 20. It means we're still despite overpaying still paying a mortage when our parents were pretty much done. If our kids are later still and paying back more studnet loans that's not great for their savings and retirement.

We live in an afforable area - in decade since everyone els has realised this and families have flooded here from more expensive nearby cities - and mortagaes and rents have responded. Finding afforable areas near work is harder than ever and transport costs are also rising.

Long term we just seem to be building up more problems - though we are not the only country doing so - high housing costs are affecting large parts of the western world.

The UK is known as having one of the most expensive cost of living in Europe. This thread sums it up. I have family in Europe and I am constantly surprised at costs when we visit and thw quality of life. When I moved here 25 years ago, you could live a pretty decent life on relatively low wages. And that is still true in many parts of Europe. Its not true so much anymore here.

And that cost makes it expensive for people.to travel here too. My family don't like visiting England. They get sub par accommodation for massively more cost than when they holiday more locally.

Yes it is spending and life choices.
I am a higher rate tax payer, I consider myself fortunate. I have about 15 years of working life ahead of me.
I recently, post divorce, set up on my own again. I could have spent less on the house I bought, but it is a place I expect to stay in until they carry me out in a box.
I also chose a slightly newer car when I came to change it, but an electric one, so the costs are broadly the same. I could have bought an old banger again and hoped.
I have an old campervan and choose to use it for many weekends away.
I can afford to choose nicer brands of clothing and better lasting furniture etc
I am also choosing to save lots in to pension and savings.
All of this is life choice - and of course I spend all my (very good) salary.

I am also a total bargain hunter. I buy from Vinted a lot. I always get a good deal on a service or utility bill. I really do make the nice things I have last well and keep them until they fall apart.

I think there are few 'wealthy' or 'high earners' who could not save money, but that would involved huge life changes such as cheaper housing area, poorer schools, less nice things in life.

The road is called loxforid not the area ( never heard of an area called loxforid btw)

It was to show that you don't need 500k for an ordinary house.

I do t live in that area either but I have a 2 bed flat I stead

Well, I would question if that is an ordinary house too. I dont live in a posh area at all, but ordinary houses around here are still nicer. In fact, I would say I live in a pretty ordinary house.

As a pp said, if this is what we are pitching as "ordinary" then I think our standards are way too low..