As the cost of living crisis continues to bite, even some of the country’s highest earners are feeling the pinch, data shows.
Research from Barclays Wealth finds that 46 per cent of those earning over £125,140 are worried about their financial stability, rising to 53 per cent of those in the £100,001 – £125,140 bracket.
Rampant inflation, soaring interest rates impacting on mortgage repayment costs and the lowering of the threshold for the top rate of income tax from £150,000 down to £125,140, have all played their part in a situation where even high earners say they are feeling the pinch.
“While those high earners are very fortunate to be earning significantly more than the vast majority of the rest of the population, they don’t necessarily feel rich,” says Clare Francis, director of savings and investments at Barclays Private Bank & Wealth Management.
“Many of them have equally higher outgoings, bigger mortgages and energy bills. They’re finding they’re not left with much money at the end of the month.”
The research finds that while most were starting to cut back on discretionary spending on non-essentials such as clothes, holidays and socialising, 25 per cent are considering moving house to reduce their outgoings.
i spoke to a high earner to find out how the current financial climate was impacting on him and his family.
‘I worry that I’m not managing to save any money’
Harry * 35, a senior civil servant, earns £101k. His partner Sarah * a creative in the communications industry earns £80,000 pro rata for a four-day week. The couple live in Islington, north London with their 10-month-old.
I recently negotiated a pay rise to £101,000 and I’m constantly saying to my partner we’re still among the richest people in the country and we’re extremely lucky to have everything we have, but sometimes it feels like me might have stretched ourselves too thin.
We bought our house last year, borrowing more than £500,000 over 40 years, and half my salary goes on servicing the mortgage. It’s not a grand Victorian house – we live in a small 60s ex-council property on an estate. We hugely dodged a bullet by managing to lock in our mortgage rate for five years before they went up, otherwise I don’t think we’d have been able to afford to stay here.
Even so, the monthly payment is £1,800. I have considered whether we’d be better off letting the house out and renting a smaller one or two-bedroom flat in a less nice area. I worry that I’m not managing to save any money at the moment and moving house would allow me to. Energy bills were about £300 a month at their peak and council tax is £152 a month. And I give £100 a month to charity.
Because my partner has been on maternity leave for the last 10 months I’ve been covering both of our living costs too. She’s now just gone back to work and her salary just about covers the nursery fees which are £1,700 a month. The new measures for childcare support announced by the Government recently would be great but they won’t be available for two years, which is too late for us.
We are getting married this summer and the wedding is going to cost about £20,000. It’s not going to be anywhere near as glamorous as some of the other friends’ weddings we’ve been to recently, but I don’t feel any shame in that.
My in-laws will pay half of the cost and I’ve been trying to save £1,000 a month towards it. I still don’t know if I might have to ask my dad to lend us an extra couple of thousand to get us over the line. Even going to friends’ weddings is expensive – there’s been a post-pandemic flurry and we’ve got five this year, not including our own. It’s a good £200-odd once you’ve factored in somewhere to stay.
I’d say our main luxury is ordering Deliveroos – we spend about £100 a week on them – because it’s an easy option when we’re tired. Having a young baby, we’re not going out as much so it’s our one indulgence, but I don’t think we have a luxury lifestyle in general.
We haven’t been abroad on holiday for years – we just visit family in the UK. Even a train ticket to go away for the weekend sets you back £250 though. We can’t afford to run a car – it’s a financial commitment and we’ve put it off for now, especially with the cost of parking around here.
In the past I liked to spend money on clothes – I’d buy designer menswear brands and think nothing of spending £100 or £200 on a jumper. I’ve stopped doing that altogether now, I’d rather find a bargain in the charity shop.
Buying clothes for a growing baby adds up but we managed to get a lot of our baby kit second hand. We used the Olio app to pick up a baby bouncer for free and found a second-hand pram on a local WhatsApp parent group which saved us several hundred pounds.
Where we live it’s not easy to get to a big supermarket – there’s a Lidl a 20-minute walk away but we often buy on the day from the smaller shops on the high street and that can be more expensive for the basics.
Energy bills were about £300 a month at their peak and council tax is £152 a month.
I used to go to a personal trainer twice a week but I can only afford to go once a week now and I pay £30 a month to swim at the local leisure centre. I haven’t bothered to upgrade my phone for a long time – it’s an iPhone 8 – so I can just stay on a cheap tariff. Because I can’t work from home in my job, the TfL charges really rack up and I also buy breakfast and lunch at the office.
I’ve had a successful career so far and I’ve felt like I’ve always been on this upward trajectory but it’s like a pyramid and progressing further gets harder as you go.
In the past I just thought of work in terms of what I found interesting, now for the first time I’m thinking about it in terms of what do I need to earn to keep improving my living standards.
I recently negotiated a pay rise but the new role is more demanding on my time and that was a real trade-off. I felt I needed the salary increase with a wedding in the offing and a new baby but as a result I’m always on call and the hours are long. I start on my phone at 7.30am most mornings and I’m in the office for 9am. On a good day I might just make it home for bath time at 6.30pm but it’s usually nearer 8pm.
A few hundred pounds each month is automatically taken out of my salary towards my pension but I’m not saving anything else at the moment even though I’d like to be. We need to replace the windows and roof on our house next and that will consume any extra from my salary over the next year after the wedding.
My long-term goal is to have a small second home in the West Country. Once I thought that might have been 10 years away, but 30 years seems a more realistic prospect now. But overall I feel very fortunate – we are not facing any hardship, just adjusting our life plans a bit.
*Names changed to protect identities