Please tell me how you spend £100-150k Incomes

[AkaWho]

I know I am in a very fortunate position to be in this band with my income.
At the moment I basically put anything over £100k in pension, but the increase in living costs is meaning I am spending most of my monthly post-tax income on just living:
Mortgage, bills, petrol and car costs, DC hobbies, gym and pt, the bloody grocery shop! Oh and holidays just seem to be more expensive too. I do have some savings and a DH who also earns/contributes but we were planning on private school for DC in a couple of years and sure we can afford it I just hate the thought of the amount of tax I lose for every £1 over £100k which means for a £20k a year school I could basically have put £50k in my pension.
Do I just have to get over this if I decide on the school fees being worth it? Is there any better way of doing things? Do others with the same salary also feel squeezed? Agreement with DH is my excess income (where exists) goes to school fees and his goes to overpaying the mortgage.
Please don't crucify me, I know I am in a fortunate position and also that there are state school options if I really can't stomach it. I just never thought I would be in a position where I need such a high salary (mainly big mortgage plus the interest rate increase, but also don't deny my family or myself anything)

Remember Labour are currently saying they will reintroduce the LTA so that might change the calculation on pensions. There’s no clear policy yet though so just one to watch now.

how old is your DC, are you just thinking of secondary?

It seems a bit mad to be putting so much into your pension OP. I’m of the “swallow the tax and enjoy the extra cash now” school of thought, painful though the tax bill is.

I earn over £100k but I am the sole breadwinner so we don’t live extravagantly at all and we definitely couldn’t afford private school unless DH went back to work. We are prioritising overpaying the mortgage at this point of our lives - well at the moment saving interest rates are higher than our mortgage rate so we’re investing the money rather than overpaying every month, but we’ll use it to pay off the mortgage early. About £1k a month goes to this and we should have it paid off in about 8 years. Then I’ll focus on putting more into my pension.

I guess:

1. Is it totally ridiculous to not find £100k taxable earnings stretching very far with a big mortgage and what seem normalish outgoings? (Does seem ridiculous but here I am!)
2. How do others balance their pension contributions with things like school fees?
3. Is there a magic trick I am missing? (Even if it's a mindset)

On a joint income of £200k you can afford private school. The end. Whether you choose to pay school fees over pension/cars/holidays etc is another matter but you can afford it.

Totally agree with this. What is it with the UK with the jealousy? Unlike for example the States where success is celebrated.

Higher tax payers pay a substantial amount towards services everyone benefits from.

Sorry it’s 60% not 67.

After 100k you lose £2 of personal allowance for every pound you earn so by £122k( might be £125k these days) you have no personal allowance at all. Hence that equals an equivalent tax rate of 60% for all earning between 100-122k.

Hence why unless you earn more than around £140k it’s not worth it the extra work and you should try and reduce your taxable income. A pension is the best way to achieve this.

https://www.brewin.co.uk/insights/earn-over-100k-beware-the-60-percent-tax-trap

@5thCommandment I thought there was a £40k limit on pension contributions?

In my situation DH earns £90k and puts very little into his pension - 8% - as it's a crap workplace scheme. I earn £67k and put a wad in - enough to take me into lower (Scottish) tax bracket. Between us that's a lot, well enough for us. Mortgage is £1400, car is lease that costs £450 a month but next year we'll get rid and replace with a used one bought outright.
If we earned another £40k I'd feel VERY comfortable but already feel fine paying school fees for one DC.

It’s 60k now

@ShareTheDuvet I agree to an extent, many people earning salaries like that are paid for their knowledge and expertise rather than their actual hourly output.

Generally however they’ve put in some serious hard yards over a good few years to get to that point.

@Captain1 ah, I’m with you now. Thank you for explaining.

I am stuck really as need every penny for mortgage and school fees, even at that level of tax.

@Mia85 thanks I didn’t know that! A quick calculation and it looks like I can put everything over £100k in my pension and my take home pay basically be the same 😮

I feel like if you’re not from a moneyed background no one tells you this stuff , I’m 100% with you OP

You're likely to be significantly better off overall if you stop the overpayment and use the money for your pension instead, especially if it is coming from a £100-122k PAYE salary. The £1k would be nearly £3k in your pension (plus any employer matching). That would leave you the same current spending money. You'd then have 8 years more compounding for that money. Depending on your ages and the mortgage length you could also use some of your tax free sum to pay the mortgage off at the end.

Depends on your priorities, ages etc but it's definitely not a mad idea to put the extra in a pension.

Really pleased to be helpful! If you act quickly you can do it for this tax year.

@Belovedbagle unless of course, they are not paying the tax, but sticking it in their pensions 😉

It's a choice not to do a budget. You have time - you do a pension spreadsheet.

If you did a budget, you'd have the answers.

This will also be a related part of the problem - you don't earn enough to just throw money at everything you want without doing a budget or saying no to fripperies:

but also don't deny my family or myself anything

Even multi million pound businesses have budgets to make sure they don't fritter away their cash and end up unable to pay for the important stuff.

You don't earn enough to throw it around mindlessly and still expect to have tens of thousands left over for private school.

I don’t know if the information is helpful OP but as a comparison:

I earn £210k plus a £20k bonus as sole wage earner

This equates to a take home of about £9k, after a salary sacrifice car and no pension contribution

Currently mortgage is £3k, school fees are £3k, leaving £3k for all other bills. It’s not tight, but we are not rolling in it. We save up for Christmas and relatively cheap holidays, have a takeaway once a month, meal-plan but eat well, cheapish hobbies. It’s balanced and budgeted. We realise we are lucky.

The £20k bonus (£10k ish after tax) goes into savings as I am trying to build up a buffer after the house move wiped out savings.

I’m currently not paying a pension contribution at all, which really worries me, but I did pay the max for several years so the pot is OK, although it’s for two given I am the only wage earner. I should be able to contribute again once eldest finishes at school, as uni costs are less than school fees.

Its a big mortgage, but it was a conscious decision to spend the money now to live in a nice relatively big house that we can enjoy while we still have kids at home, then downsize in 10 years which would at that point leave us mortgage free.

Have you thought about taking any ironing in? Cash in hand, no judgement here, times are tough 💐

You are totally right!!
My IFA got me to share a budget of sorts but I must have not been accurate because they seemed to think I could afford a few hundred in an ISA each month and more in my pension- I didn't end up putting any in the ISA and reduced what they suggested in the pension because I ran out of money the first month.
Any tips for how to do this? My bits and pieces come to be an overwhelming number of lines in my bank/credit card statements. Any really good tools or online guides (I know I can google but if anyone has recs I would like to hear them!)

You can reclaim your pension allowance back over three years. (£60k a year, used to be £40k).

60k a year mortgage + 40k a year school fees (will soon be 60k). Then add 3.5k a month for bills, food, clothes, house maintenance, car, days out etc that is 37k a year + 10k holiday.

There you go, 147k a year net, which would be 240k gross salary.

Post a SOA on the MSE forum. They are brutal, so you need a thick skin, but incredibly good at spotting where reductions in outgoings can be made.

Just curious are you intending on paying all your children’s Uni fees or will they be getting a student loan as you say it will be less than private school.

Scottish students going to Scottish unis so no fees. Makes me feel better about the Scottish income tax rates!

Ah okay I understand now. Also the take home amount because of higher taxes in Scotland.