Where do people get ther money from??? What is a normal income??

[MidLifeCrisis40plus]

I've changed my name for this one, as it's not what I normally post about and I might be opening myself up to a few negative responses.... so, here goes:

What is a normal family income? I live in a relatively affluent middle-class neighbourhood. I work hard and think I've done reasobnably well from life in many ways. But I feel like we as a family are the poorest people in the neighbourhood - we can only just afford our current mortgage (on a medium-sized semi), never mind moving on to something bigger, yet everybody around here seems to be able to spend on bigger houses, more expensive holidays etc - and usually only one person per household is earning. I work part-time and my partner full-time and our joint income is just over £70K per year. To me, it sounds reasonable. Yet there is no way we can afford the lifestyle our friends, relatives and neighbours lead. Apart from the odd high-flier, they seem to be in similar middle-mangement roles to us.

So - what do other people think? What's the secret to moving onwards and upwards? Is it that people inherit money from wealthy relatives? Are we just crap at manging the money we have? Or is normal to earn a lot more than we do?

I think a lot might be to do with house pices.

My neighbours boughttheir house when it was built in 1977 for £11.000 (wich was a lot of money at the time apparently but I would not know as came here much later) They sold it 25 years later for £135.000 it had been completely payed for long before. If your neighbours are in their 50's or over they might have payed their house what we would consider to be a ridiculusly low amount today and have no morgage worries anymore?

A lot of people put everything on cards or have leasing contracts for their cars (a new car every year but do not actually own it) We always had second hand cars, have no debts and do not use credit cards it deffinitely helps staying on top of things. TBH we live on DH's salary which is far less than 70k and we are missing on nothing in the sense that there is a roof over our heads, we eat nice food.I have noticed as well that while we are very frugal as far as "entertainment" goes( going out, cigarettes, alcohol, video games, hairdresser... are expenses we do not have) , we do buy nicer food than a lot of my friends who appear to be well off but only buy shops own economy brand. We like to eat, they like to party, everyone is happy though

I agree with all the posters, true happiness comes for appreciating what we have rsther than envying the neighbours. You will never know what goes on in their lives, they might have a lot more debts and stress than you do but are very unlikely to broadcast it.

gorionine
I reckon you are right about credit. We own everything outright. We did buy our cars on credit, but that has now been paid off, but as far as anything else goes, if we can't afford it we don't buy it. We are in our 50s and started on the housing ladder at the right time. Anyone else remember when the mortgage interest rates were nearly 13%? I do. We also bought when house prices were rising at a ridiculous rate.

Our first house bought at £11,000 sold for £15,000 four years later - only £4,000 more but as a percentage represents 36%. Our second house bought at £27,000 and sold for £67,000 - a rise of 148% in six years. You don't see those kind of housing price increases these days, thank goodness, or we would all be homeless.

'blah blah blah, I don't know how we manage on £100k a year when our mortgage is so huge for our big house & our 5 children and their kumon maths lessons'

House prices are such a huge part of it. I live in a fairly poor area of London and feel pretty well-off.
If I go two miles up the road I'm in a much smarter area, where we could only just afford a two-bed-and-boxroom terrace house and wouldn't be able to afford anything in most of the local shops.
But two miles away is what was considered a bad area 15 years ago. My parents were aghast at the idea of my living there, let alone where I do, but one advantage of not getting any money from them (first generation middle-class; none to spare) is they couldn't guilt us into buying somewhere 'respectable'.

I went to a posh school and had a reunion a few months ago. It was most interesting that the vast majority are living in expensive areas (Surrey, Fulham etc) and plan to send their offspring to prep schools, but almost all are dependent on their parents for it.

Most people who buy a house and live in it for 40 years will find there are ups and downs over that period but that the advantages of buying tend to ourweigh the disadvantages. Plenty of people have struggled to buy anywhere. When we bought in 1982 everything for the chidlren came from Oxfam, church jumble etc. It wasn't that prices wer elow and it was easy. It was hard. Now had I waited to nearer 40 to have my children than the 22 that I was then it would have been a different set of factors.

Most people I know seem to earn what they do through their own efforts as most parents know that giving children money tends not really long term to help them very much.

There will always be someone much worse off and much better off than most of us but it is health and internal mental health which matters most.

Xenia, I'm sure it was not at all easy to buy a house at the beginning of your career and having small children - you did very well indeed. But it doesn't change the fact that house prices were certainly very low in relation to earnings compared to where we are now, which means that for very many people now, salary is only a very small factor in overall wealth.

Depends where you bought. Our house then cost £40k (and that was double what my chidlren's father had paid for his first as we moved to SE for work). It was a massive jump. Also our pay was 7500 each. so on one salary could buy nothing. One two salaries even taxed at 33% and with 12% interest rates we could just about afford to buy.

Today those houses cost £250k and that 7500 salary is £37k (my daughter is in the same equivalent job)

So the wages hav gone up 5x and the house prices have gone up x 6 (same street, same job in my comparison) and the interest reates are a quarter of what they are and tax rates lower. I'mn ot sure is it hard and in those days it was very hard to get any loan at all - just like now, even if you'd saved with that institutino for 10 y ears.

The ratios in your particular case are quite unusual to say the least. £37,000 for a starting salary is certainly far above the norm, and it is equally rare for salaries to have multiplied by five over that period. On the other hand, the property I live in is now worth a little over 10 times what it was bought for in 1986. My first pretty menial job three years later paid a salary of £9000. I haven't checked but I'm pretty sure it's not paying £90,000 now, or even a

quarter of that

yes, but my children's father's teacher's slary was £7500 that year too and he was head of dept. What do heads of dept in outer London who are teachers now get- presumably stil about £37k if not more.

It's all about when you bought. We were lucky enough to buy just at the end of the 90s housing slump, when wages:house price ratios must have been at a historic high and two young graduates on decent but not Goldman Sachs wages could afford to buy a house in inner London with little or no parental help.

My friends in similar jobs are really struggling, and that's almost all down to the fact that they bought 5 years later. We are very well aware that it's a fluke.

I'm so glad to have come across this thread as this is something I have wondered for a while.
Our joint income is around £94-£104k ( part of my salary is commission so it can vary)and whilst we do ok we are pretty modest in most aspects of our life - i.e. modest semi detached house, small car, definately no designer clothes etc.

We do send our one DC to a private school but this costs no more that nursery fees cost us before DC started school and we were used to paying this. Our other luxury is our holidays and we make sure we have at least one every year but we don't go out a lot ( maybe once every couple of months if that).

Am not complaining but I do wonder what we are doing wrong when I see friends driving the newest land rovers or BMw's and buy expensive make up and designer bags and every month and there is just no way I could afford to do that.

All the posters on this thread have assumed the following:

Inherited wealth from DPs/GPs/bachlor Aunts & Uncles.
Remortaging properties bought a long time ago and living off the capital.
Store cards, credit cards, cars/sofas on monthly payment schemes.
Generous gifts from wealthy parents.

And whilst those factors may all play a part to a greater or lesser degree, the simplest way of improving your material lifestyle (if this is your objective) is to earn more money.

So maybe these people just earn more? Is that not possible?

I dunno, think comparisons are not helpful here. Makes everyone competitive and miserable.

Obviously some people earn more than others. The point is that many people are finding that the difference in salary is not necessarily resulting in the expected difference in wealth, ie some of those earning well above average salaries perceive themselves to be enjoying only average or below average lifestyles. A great deal of that is due to the fact that the cost of housing has risen so far in recent years relative to income that for many people wealth is currently determined less by salary an by their housing situation. It's not a question of "remortgaging properties bought a long time ago and living off the capital"; pretty anyone who bought 6-10 years ago will now be very very much wealthier than their neighbour on the same salary who has only just bought or not bought at all.

This - together with the closely related issue (in the SE at least) of inflated salaries within the financial sector compared to most others - has to be a key reason why so many of the professional classes feel themselves to be so much poorer than their less-qualified parents and neighbours, and why this sort of thread keeps appearing.

Lots of cars are company cars...
lots of those families would quickly go under should one of them been unable to work.

I've heard enough from families sending say 2 kids to private school, 2-3 hoidays a year, au pair of their hardship for buying into expensive parts of towns...

all part of the package they have chosen, 'cos every step of the way they had a choice

This made me laugh (and not in a bad way, in a how-things-have-changed way):

"£70k is riches beyond belief to me. However, we live in a 4 bedroom detached house in a nice area, run 2 cars, can afford to go abroad once a year and eat out every now and again"

70k is not that much to us - less than either of us makes, actually. But a four-bed detached house in a nice area is "riches beyond belief" to me.

Admittedly I live somewhere identified by the Economist as the most overpriced housing market in the world.

My parents bought the sort of house I could only DREAM of (5BR, inner city, detached, garden) on two academic salaries. On the salaries for the equivalent jobs now you'd be doing well to buy a one- or two-bed terrace or flat.

Frankly that's why I never give to charities that support the elderly. I did my share of supporting the elderly the day I bought my flat from a baby boomer for five times what he'd paid for it.

re:supporting elderly via charities - world's very unfair place...

one elderly lady who owns house which is going to her nephew didn't have qualms in asking charity to help her to fix things around her house...

I think 70k is a very good household income unless you are in the SE where housing costs are so much higher.

Our household income (we both work FT) is less than half that atm (tho it has been more) and we are OK. Mind you we bought our house more than 10 yrs ago and I agree that makes a massive difference.

It's funny when you look at what other people do, I agree - a friend of mine doesn't work and her partner is not in an especially senior role, and yet they belong to an expensive gym and go on foreign hols.

But you don't know - they may have an inheritance they are using; they may buy all the kids clothes at Asda; maybe they only get a new car every who knows when; maybe a lot of it is bought on credit. You don't know what goes on if you aren't in the family (and frankly I for one don't wish to).

@ 123honey even after tax and mortgage you were left with (on yr figures) £60k which is a long way from what Mr and Mrs average earn. I'd be surprised if anyone on an income of £60k, after mortgage or rent were paid, got much in the way of tax credits.

I can't say Help the Aged is top of my priority list of charities, I'd rather support the local donkey's than the retired teachers and doctors rattling around in their 5 bed detached properties they can't afford to heat, daft buggers.
However people keep saying the south is expensive, the north is not much better you know, HPI hit us as if not harder because around here the jobs are all public sector, it's going to be a blood bath if the cuts really do happen this year.
As for income, DH and I have always done something else as well as our main jobs to keep our income topped up and so we wouldn't destitute if we were made redundant.
We are now self employed and i couldn't imagine working for somebody else again tbh but you need your fingers in lots of pies.

Yeah, when I think about it, every single person I know who lives in a four- or five-bedroom house is over 70.

We earn 21.5k between us and we get £81.20 child benefit. Altogether we take home £1580 a month adding them both together.

We also get money towards childcare but no other benefits or help. We have a mortgage and we have a decent lifestyle I think. We get to go on holiday every year and we have our own place. We have a car and we also get to go out on nights out and eat out a couple of times a week.

I think its about being good with money. I go on mse.com a lot. I know all about the bargains and always get good deals on things. I also am not one for brand names and am not particularly materialistic. I would rather go out and have a laugh than have lots of 'stuff' really.

Our combined income, including TCs, CB etc. is less than half the OP. I used to think £30k or more was a massive income, but with today's cost of living it doesn't seem to go that far. It's still thousands more than we had a year ago more, so I am definitely not complaining.

I also wonder where people get their money from. Where I live there are hundreds and hundreds of new houses being built and sold for astronomical sums, and yet the average income in this area is one of the lowest in the UK. There are very few jobs and I wonder where on earth the people come from who can buy these houses.

Also having now read the thread all the way through I will add in my area average house price is 14 times average salary but we still have a mortgage as do a lot of other people we know. I only have had it a few years as well as we are both only 26.

At the moment I'm concerned I'm even going to be able to afford many of the necessities for the baby on the way, as well as making the house I'll be living in hospitable for a child. My partner and I will have to manage our shifts so that there is always one of us to look after the baby because paying for childcare would be out of the question.
If it was really being able to go abroad and own the newest cars and gadgets that were going to be a priority, why not move to a less affluent neighbourhood in the first instance?
Also bear in mind, that just because people are going to more luxurious destinations, it doesn't necessarily mean they are having a better time or a happier. They could spend their "family" holiday doing separate things, or glued to their various mobile gadgets.