[Finance] Does earning 100k a year make you feel well off these days?

[Weststander]

I always find these discussions a bit distasteful when about half the country earn less than a third of that.

Anyone on that kind of figure would do well to remember they're bringing in more than 96% of workers. If it's your household income, it puts you in the top 5%.

Stay humble!

 

[The Optimist]

In London nursery fees are £1500 a month aren't they ? 2 kids - 3k. Average mortgage 2.5k .... Other bills and outgoings 1k. Salary gone if one earner !

Full time nursery fees are about £2k a month in London - although this varies with age. Younger kids can be no more than 3:1 children to adults, older kids the ratio goes up and there’s more government funding - although I believe if one parent earns over £100k you lose some / all of the government funding (I don’t earn over £100k so haven’t had to find out for sure).

Last year there was a period when we had two kids in nursery 3 days a week and it was costing £2300 a month.

 

[Cheshire Cat]

If only.......

Yes it would.

 

[The Optimist]

But that's bonkers money. OK, my mortgage is paid off now but at it's highest it was £700 and no child care costs as my wife didn't work. I did have to cough up a monkey to commute to London but very manageable. And I earned less than half £100k.

Assuming you know what your house is worth now have a look at a bank’s mortgage calculator and see what the monthly repayments would be.

Also stick your salary at retirement (you talk in the past tense about salary so I assume you’re retired) in an inflation calculator and in today’s money you might be a lot closer to £100k than you think.

As an example a £500k house with a £50k deposit and 25 year repayment mortgage costs about £2500 a month.

And a £54k salary in 2000 is equivalent to a £100k salary now.

 

[The Optimist]

I guess my answer is £100k family income in London is decent and you shouldn’t be scraping by but you won’t be as rich as you’d think if you’ve got a mortgage and kids. And clearly in the long term you’ll be well off as inflation increases your income but not your mortgage and nursery fees stop.

For anyone over a certain age don’t forget about inflation. See my earlier post about how £54k in 2000 is the equivalent of £100k now.

 

[The Optimist]

One final point. If you earn over £100k you start to lose your personal allowance. This effectively means that there is a 60% tax rate between £100k and about £125k.

 

[Seagull27]

Take home pay calculator would have someone on £100k having £68,557 after tax. Minus £42k ( your £1500pm mortgage and £2kpm nursery) would leave then £26,515pm

Or just over £2k a month for pension, savings, utilities, holidays, shopping. And that's only for the handful of years both kids would be in nursery.

I think I'd feel more than fairly well off

Take a couple hundred off per person for student loan as well. Then with pension, bills, car, food, other monthly outgoings and general spending, you're probably down to under £1k per month for savings. Which is not a bad position to be in at all - enough for 1 or 2 holidays a year and some spare for savings. But then the cost of things like weddings, cars, maternity leave (if not paid for some of it), moving house, that a lot of 25-40 years olds will have done, takes out a lot of those savings.

Let me be clear - I'm not arguing that a household income of £100k leads to financial hardship - you should be comfortable month-on-month, and the capacity to build some savings. But I don't think that's wealthy, to the point where money isn't a concern.

 

[Stumpy Tim]

Yep that's where I'm at. Lots of nieces and nephews but don't feel the need to have a family, perfectly happy with just me and the Mrs. Nice long sleeps at night and no money troubles.

Gen z is swaying this way as well. And a lot of my mates who regret having a family and are broke every month (despite earning big bucks) after trying to keep up with the Joneses and the unattainable insta dream life !

I would be significantly worse off in my life if I didn't have kids... Obviously not financially, but in every other way. I'm fortunate to be comfortably off, but even if I was skint I would still want my two kids. Best thing I've done with my life frankly.

 

[Gwylan]

Assuming you know what your house is worth now have a look at a bank’s mortgage calculator and see what the monthly repayments would be.

Also stick your salary at retirement (you talk in the past tense about salary so I assume you’re retired) in an inflation calculator and in today’s money you might be a lot closer to £100k than you think.

As an example a £500k house with a £50k deposit and 25 year repayment mortgage costs about £2500 a month.

And a £54k salary in 2000 is equivalent to a £100k salary now.

No, I'm not retired

Yes, my mortgage repayments on a small deposit would be about two grand a month but that's a misleading comparison. This is the third property I bought, so I could put in a 70% deposit. If I did the same to this property at current prices, then a 20 year mortgage (which is what I had) would be £550, comfortably manageable on £50,000, let alone £100,000. Very few people buy a 4-bed house as a starter home

EDIT: I should also add that I don't run a car - never have. They're not cheap and if you're living in a city like B&H, they're a bit of luxury purchase - obviously different if you live in the countryside. But that's certainly something that would eat into monthly income

 

[Milano]

"I regret having kids" said no parent ever, well ones that deserve to be anyway. So I call BS on that.
Would I be a lot better off financially if we hadn't had kids? I'd say that's debatable as I'm not sure that I would have pushed myself as much without them. Probably a bit. But the idea of not knowing my sons is inconceivable to me now. I learn stuff from them every day, they surprise me every day.

 

[Uh_huh_him]

Our household income is about £100k
£100k mortgage.
1 Car
£15k in various loans/credit card debt.
3 kids - 2 at University, 1 unemployed
Helping out Mother in law with some of her costs.

No I don't feel well off.
But bills are covered and we can probably just about afford a 1 week holiday away somewhere,

Could be a lot worse.

 

[Sorrel]

One final point. If you earn over £100k you start to lose your personal allowance. This effectively means that there is a 60% tax rate between £100k and about £125k.

And now the 45% tax rate is at just over £125k so there is not even a gap before that arrives.

Those who pay themselves via companies - as some higher earners do - can avoid some of this.

 

[Insel affe]

Well, if the £100k is JOINT income from two salaries, and assuming that they each earn exactly half of that (which is unlikley), then there is one individual taking home £35k or less.

If in your scenario, their childcare costs are £1.5 x 2 x 12 = £36k.

The lower earning partner in the household clearly needs to take a career break until at least one of the children starts school.

Instantly they are significantly better off financially, and the kids enjoy some hands on parenting.

Please let me know where to send my invoice.

thanks

Very good point, when we moved back down from London 15years ago we were earning the same amount roughly 35k each.
The wife stayed working in Camden and travelled up every day.
I had to start from scratch down here and the job I landed within a month was about 26k.
We had to put the little one in nursery the long one from 8am-6pm, there was not much difference between what I earnt and the nursery charges. Several times I nearly chucked my job as it was so stressful leaving her for such a long time and not seeing the benefit of my earnings at all. Luckily things have worked out and when she went started school the savings were huge and at the same time the wife rocketed up positions at work and I now earn over twice what I initially started on here, mortgage free two years ago.

100k now, with no doubt more expensive childcare for 4 years I don't think works down here, or it is a struggle.
100k a struggle, hard to think that eh.

 

[keaton]

If

Take a couple hundred off per person for student loan as well. Then with pension, bills, car, food, other monthly outgoings and general spending, you're probably down to under £1k per month for savings. Which is not a bad position to be in at all - enough for 1 or 2 holidays a year and some spare for savings. But then the cost of things like weddings, cars, maternity leave (if not paid for some of it), moving house, that a lot of 25-40 years olds will have done, takes out a lot of those savings.

Let me be clear - I'm not arguing that a household income of £100k leads to financial hardship - you should be comfortable month-on-month, and the capacity to build some savings. But I don't think that's wealthy, to the point where money isn't a concern.

If you're concerned about your money when you have a grand in savings a month for relatively short time both children are as nursery then you have serious budgeting issues

 

[Blue&WhiteSea]

TL;DR: If you are boringly sensible and don't increase your expenditure to match your salary, you should feel pretty comfortable, maybe verging on rich on 100k.

After the minimum pension contributions for auto enrollment, the take home pay on £100k is £5600 per month for a single earner and £6300 if 2 people earn £50k each.

90% mortgage on a £280k house (around the average house price in England I believe) is £1400 a month for a 25 year mortgage at 4.7%

Using ONS averages, food, council tax, energy bills, water, broadband and TV licence adds up to another £640 per month

So that leaves a couple earning 50k each about £4260 a month to cover all other spending or a single earner £3560.

ONS averages for all costs excluding housing are £2200 per month, so using these figures instead of just the above items the remaining reduces to £2000 per month, for a single earner or £2700 for 2 earners.

That should be enough for most to feel comfortable but relies on average spending and an average priced house which is unlikely for someone earning 100k!

It also relies on only putting the minimum into a pension which is very short sighted!

 

[The Optimist]

And now the 45% tax rate is at just over £125k so there is not even a gap before that arrives.

Those who pay themselves via companies - as some higher earners do - can avoid some of this.

45% after paying 60% would feel like a bonus.

 

[Paulie Gualtieri]

There's a £900 difference in net income for a couple that both earn 50K and one person earning 100K, and that's before you factor in that 100K from joint-income doesn't exempt you from receiving child benefit every month.

It gets a lot worse on the next £25k earnt compared to both earring £62,500 per annum.

At 100k you lose the additional 15 hours a week of childcare and tax free child allowances. You also pay 62% tax (inc the 2% NI) on the next £25,140 you earn based on the erosion of your tax free allowance.

 

[Dibdab]

Living in London on well over £100k a year and feel like I can afford a decent lifestylee but far from well off.

 

[dwayne]

"I regret having kids" said no parent ever, well ones that deserve to be anyway. So I call BS on that.
Would I be a lot better off financially if we hadn't had kids? I'd say that's debatable as I'm not sure that I would have pushed myself as much without them. Probably a bit. But the idea of not knowing my sons is inconceivable to me now. I learn stuff from them every day, they surprise me every day.

Yer most wouldn't say that openly. But I've worked with many blokes over the years at their most happiest away from wife and kids preferably at the footy or down the pub

 

[BiffyBoy100]

Yer most wouldn't say that openly. But I've worked with many blokes over the years at their most happiest away from wife and kids preferably at the footy or down the pub

But then if they spent their entire life at the footy or down the pub, they'd probably be happiest seeing their kids