Income brackets: PERCEPTIONS of low and high?

Tancred

HAMISH_MCTAVISH wrote: »

I tend to think in terms of household income.... As really that's what determines lifestyle.

So for household income up here in my neck of the woods I would perceive low income as less than 50K, and high income as more than 150K. Everything between is middle income.

The income distribution is Aberdeen is skewed by the very high salaries paid in the oil industry. This is now causing problems for young people who can no longer afford to buy a property in the city.

michaels

Slightly OT, I sometimes catch TV shows like Deal / No Deal and often £10k or similar is described as a life changing sum of money and yet I can't imagine for many poeple that it would be (except for those who would spend it quickly in which case it might change their lives for a few weeks) which leads on to the thought of how much money would I need to be 'life changing'. I fear it is of the order of each multiple of 200k = 1 day a week less working

lostinrates

michaels wrote: »

Slightly OT, I sometimes catch TV shows like Deal / No Deal and often £10k or similar is described as a life changing sum of money and yet I can't imagine for many poeple that it would be (except for those who would spend it quickly in which case it might change their lives for a few weeks) which leads on to the thought of how much money would I need to be 'life changing'. I fear it is of the order of each multiple of 200k = 1 day a week less working

I don't think this ot, I think this is actually a really good development of the idea, thank you michaels.


I am not a lottery player, DH is.

We sometimes have the discussion over what amount would be 'life changing' for us and don't always agree.

'Who wants to be a millionaire' (the cole porter song) is a rather old tune now, and a 'millionare' is a comfortable position to be in, but not, I suggest, one in the way Cole Porter wrote about in the fifties (?)

Tancred

_Ed wrote: »

It's quite an interesting thread really. It’s amazing how your own perceptions change as your circumstances do…

I started work 10 years ago as an engineering graduate from a good University with a pretty respectable starting salary of 25K. I felt comfortable, but by no means rich and thought you'd need 40K to start to really feel well off.

10 years ago £25k was certainly pretty high for a graduate starting salary. So I suspect you gave up engineering for investment banking or management consulting.

_Ed wrote: »

When my earnings reached 40K, I still felt comfortable but 60K became the magic threshold for well off in my head.

Ten years on and married with a little one, my wife and I have a combined gross of around ~150K including bonuses (this is in London - with the earnings split pretty evenly between us). In my head this sounds like an enormous sum of money, completely unimaginable to my 23 year old self.

It's a very high though not enormous sum, certainly not in London. Obviously you both work full time in professional jobs. Having said all that, you are still in a very privileged position - similar to two married doctors in their 30s. Your household income must be around £8,000 a month.

_Ed wrote: »

I suspect lots of people would consider us rich - imagining we live an opulent lifestyle with copious spending on extravagant luxuries. When I was on 25K, I know I would have imagined that.

In reality, our lifestyle is pretty modest… we definitely feel comfortable, but certainly not rich. To give you an idea we've just bought a terraced house in South London. This isn't somewhere flashy; it’s a 3 bed terrace in a modest area for around 3x joint salary.

With the new addition to the family we've just got a car - second hand for a grand.

Ok, but how would you able to cope on half your current household income? Being able to live in London is now a luxury. You talk about a 3 bedroom terraced in London, but on joint income of £150k you can buy a plush new 1930s styled 4-5 detached house with double garage and large garden on my estate between Wokingham and Bracknell. You have made a choice to live in London but you are not obliged to live there. You might have bought a second hand car but you could easily lease a new Merc - it's what you can do that matters, not what you choose to do.

_Ed wrote: »

As a little extravagance to help my wife, and so I don’t have to spend my weekends cleaning when I’d rather be playing with the little one, we have just decided to get a cleaner in for 2-3hrs a week.

This weekend I'll be up on the roof fixing the leak (weather permitting) – certainly not perusing designer shops or out on the golf course.

And our main holiday last year was to Sicily, which was lovely, but certainly not exotic by modern standards.

What's your point? You could go to Skegness or Bognor instead. I'm not trying to be facetious, but why do you feel it necessary to spend thousands on some globetrotting holiday? Not so many years ago Italy was a destination for the very well heeled only.

_Ed wrote: »

Of course, that leaves us with spare cash to put aside each month.... but even then perceptions of savings change with time. Ten years ago a 15K savings pot would have been huge. Now it's contingency to have the roof redone if my dodgy repairs aren’t up to the job ;-)

Obviously we’re in a very fortunate position – we are very well off and could spend more if we chose to. However, our perception is that even with our income, it doesn't feel like there’s money sloshing round to be wasted. It’s certainly not lifestyles of the rich and the famous.

I'm always amazed when I head back to see my parents up north where salaries are significantly lower and yet I see new BMW’s and Merc’s everywhere. I really don’t understand how people can afford it. Of course, how they spend their money is their choice.

Roof repairs don't have to be done by you - you can get a roofer to do that. Are you honestly saying that you only have £15k saved up with £8k a month sloshing around in bank accounts? Hmmm. :cool:

Those BMWs and Mercs are probably almost all either company leases or on PCP/hire purchase. It's easy to get finance these days - dealers get commisssion, so they are literally throwing it at pepole. The others will be owned by the well heeled 55+ brigade with no mortgage and at the peak of their careers - or on good final salary pensions. No surprise in that.

_Ed wrote: »

I now suspect to feel really rich I’d need to earn millions. Of course, to a family bringing in 20K a year, 150K would probably feel like millions to them.

I sense that you taking the pi** here. You have made several lifestyle choices which are tying you down to London. So what? Many people on half of your household after tax income survive very well even with jobs in London.

Tancred

michaels wrote: »

Slightly OT, I sometimes catch TV shows like Deal / No Deal and often £10k or similar is described as a life changing sum of money and yet I can't imagine for many poeple that it would be (except for those who would spend it quickly in which case it might change their lives for a few weeks) which leads on to the thought of how much money would I need to be 'life changing'. I fear it is of the order of each multiple of 200k = 1 day a week less working

What is 'life changing' to some isn't for others. For me, £130k would be life changing as it would pay off my mortgage.

Halle71

That's an interesting tangent.

At what point would do you think you would give up work if your received a windfall?

A million would not be enough. You might be able to live rent/mortgage free for the rest of your life but that's about it. I would imagine that in that situation I would downsize my job - work part time in a less stressful job to pay the other outgoings.

Even 5 million doesn't seem that much for a couple in their 30s to live on forever.

If I had 10 million then I would consider it.

Tancred

al25 wrote: »

My two pence,

Area = London
<80k is Low
80k - 250k = Middle
1mil to 5mil= Comfortable

Utter nonsense. :rotfl:

Tancred

Halle71 wrote: »

That's an interesting tangent.

At what point would do you think you would give up work if your received a windfall?

A million would not be enough. You might be able to live rent/mortgage free for the rest of your life but that's about it. I would imagine that in that situation I would downsize my job - work part time in a less stressful job to pay the other outgoings.

Even 5 million doesn't seem that much for a couple in their 30s to live on forever.

If I had 10 million then I would consider it.

A million would not be enough? It would for me. I could pay off my mortgage, extend my house and have enough to invest, giving me around £40-50k a year for life index linked. I could live on that fairly comfortably. I would probably need at least £2M to give up work immediately, though. With £1M I would probably work until 55 and then give it up.

Why is £5M not enough? Assuming you spend £1M it would still leave you with £4M to invest, which would easily generate £200k a year if you use it to invest in an income producing unit trust or rental property.

mayonnaise

Tancred wrote: »

What's your point? You could go to Skegness or Bognor instead.

I'd rather go to work than holiday in Skegness or Bognor.

Prothet_of_Doom

Tancred wrote: »

I would say that in the North West anything over £40k is a (relatively) high income. Over £60k is very high, in relative terms.

As a well qualified Chartered Engineer, I would say that it's almost impossible to hit £40K as a permanent Employee, in a highly technical job in the North West without taking on managerial responsibilites. This is why I am self employed (ltd company) and Freelancing contracting in the East Midlands, and travelling back home at weekends.

I know hardly anyone personally who earns more than £35K in the Northwest. But I know a few couples who jointly manage to hit £65K, and I know plenty of families who are jointly on less than £25K.

The main difference I see between these 2 is that one lot spends on pointless luxuries, and are brand junkies, and the other lot have to think more carefully.
Also the higher earning couple and families, seem to have alot more debt, so that when one half was made redundant it was a really big problem.

In terms of tax and income, I believe and have done ever since my wife choose to be a stay at home mum, that whatever the tax rates, the partner of a parent of a child under 10, should be able to utilise the full tax of their partner. Effectively Married couples should be able to declare a joint tax return. (when i say married, I would include those who struggle with that commitment, but who would be able to commit to the HMRC for 1 year at a time)

I think £50K should be the 40% band, and £100K take you to 41% and every 10K take you up 1% to 50% at £150K, so yes earning an extra 10K above 150K would result in about £3K in your pocket after tax and NI. But you could avoid any tax by putting the whole lot in your pension. :rotfl: