Apparently we need a household income of 'at least' £45K a year....

[notyummy]

David Kuo, of investment advice website Motley Fool:

'The average person in the UK spends around £32,000 a year. This is made up of £25,000 on basic expenses (transport, food, clothing etc) and £7,000 on mortgage repayments.

The upshot is that the average household needs a gross salary of about £45,000 just to break even.

That is why, I reckon that the average person won't be happy unless they earn around £50,000 a year. However, it is may still be a hand-to-mouth existence.

A salary of £100,000 a year can make a huge difference. After tax, this works out at £65,310. And after average expenses, there should be around £33,310 a year left over.

Someone earning a salary of this size could retire in reasonable comfort provided they invest their disposable income carefully. They could amass a pension pot of around £550,000 after 10 years and almost £1.8m after 20 years.

Of course, this assumes that a person on £100,000 is prepared to live modestly, spend carefully and save diligently.'

Thoughts ladies??

Thanks Mumble will listen to that, I have been hearing those reports and can see where the figure of £50k for optimum satisfaction comes from.

It is true that regional differences are important - I wish we could move further north for instance but I don't think dh would fancy a 6 hour daily commute I think happiness is a very slippery concept - and not always the most important consideration in making life decisions.

Well DP is on 25,000 and we're living hand to mouth at the moment. His travel into London costs over 4k a year and is only going to go up. plus rent taxes etc there certainly isn't any money left over for pensions/savings.

Sister's H earns DOUBLE DP's salary and she's always complaining to me about money ffs.

Two thousand a month on basic expenses? Not including rent/mortgage? I don't see that's necessary at all. Do people think that's necessary?

Appletrees - I can't even imagine how it's possible, never mind necessary! Must be a different idea of 'basic' necessities to mine...

£7000 a year mortgage repayments sounds very low to me though, we pay well over twice that, and we have a fairly modest mortgage compared to most couples we know.

well my Dp earns 30,000 and I earn 17,000 part time. We never have enough money, and are not paying into a pension.
Rediculous.

DS and I live on less than 15k pa. True, it would be nice to have more. But we are happy most of the time. I will probably have to work well into old age anyway, if I live that long. People my age and younger won't have property collateral to fall back on to due to the exorbitant cost of housing. But that is all a long long time in the future. Nothing I can do about it now.

45k is a huge income!

Does childcare come into that 'etc' of basic expenses? If so then I can see where that figure comes from.

45k isn't a huge income. many managers in surrey earn that. 60-70k sees like a very good salary to me. most of the top managers at my work are on 150k +++ benefits.
that to me is Huge.

Its all relative. as others said it all depends on where you are. you can't compare wales to kent.

It is all relative.

QoD - my DH earns more than your sister's H, and we still have a moan about money. The long and short of it is, that it never goes as far as you would like it to. And remember, that although his gross salary might be double, his takehome pay will be far from double because he will be paying a lot more tax on it.

£45k is not a huge income, and I think the point of the article is that neither is £100k. Yes it is a lot of money, but it is not enough to just spend on whatever you like and expect to have enough left over to retire comfortably which is what a lot of people would imagine you could do on such a salary.

Another point about the 'necessity' of relative levels of income - it's been well proven that an individual adapts to a pay rise within a matter of months. That becomes their new 'basic' level to which all comparisons are made. Which is why more money (provided you have above a minimum level to provide for basic needs, food, clothing, housing etc etc), doesn't actually make you happy.

So someone earning 100k may feel like their finances are as much of a balancing act as someone earning 40k. Nb 'feel' like, not 'actually' obviously, but it's all about perceptions. Believe me, many of my clients ate high net worth individuals worth millions, and they are no happier than you or me.

Goes back to the quote above about (financial) happiness = living within your means, whatever they are.

are high net worth individuals, not ate

now that would be an interesting job!

Riven - hence my point about above a basic level of income where those needs are met.

lukewarm that is a v.good point. We always put at least 50% of any payrise immediately towards pensions and savings so that we don't get used to spending it all - if we didn't and just left it in the general pot I know we would spend it.

Our mortgage payments are double that for a very average semi in an average, nothing special area up north.
Having said that I never hesitate to put the heating on when we need it and we eat well every day.

It never seems to be enough though, whatever we earn.

Riven, I don't know, interesting question. Depends where you live obviously, and if you have any non-average expenditure needs (eg 15 children!), but maybe somewhere around the level of the minimum wage, is that how they set it?

There was a programme on last week which said that only 10% of people earn over £27000ish. The average income is skewed because of that 10% some are earning 100000s but at the lower end there isn't room for people to earn that much less. I don't know if it was for everyone or only full time workers.

Riven - looks like there are think tanks debating this very question (of course there are if I think about it, it's quite a fundamental question for society really)

eg here

interestingly, they say that the minimum wage doesn't usually meet the minimum income standard they've come up with