What does that extra £283 a month get you? (every £5k on salary)

ClarkeKent

Interested to see the other day that an extra £5k in salary gets you around £283 after tax per month. Even less once you hit that 40% barrier.

Got me thinking about that boss that earns £10k more than you and gets a whole load of hassle and stress. Basically he/she gets a few new pieces of outdoor clothing per month and a few more meals out and then he/she is essentially on the same wage as you.

As many earn more we become more frivolous and are blowing away the extra cash and essentially pulling the same wage but with more stress.

Thoughts please?

Autumnella

I work in a call centre so our bosses definitely do not have a lot more stress and hassle in work than we do. I agree that the more you have the more you spend though so everyone ends up a similar financial position anyway, even millionaires worry about money. But for me that extra money would be the difference between driving a new shiny reliable car and the banger I'm driving at the moment and a family holiday once a year so it would well be worth any extra stress and hassle.

theoretica

Many people are very bad at managing their own finances, and advertisers are amazingly good at persuading us we need stuff which we don't even want.

Personally, if I got an extra £283 a month it would mostly go into the early retirement/major emergency pot. If I saved it all it would be enough to retire 4-6 months early for each year worked, or give me breathing room in case of redundancy or illness. Being honest, my savings probably wouldn't increase by the full £283, I would probably need to spend some of it on a smarter work wardrobe, but over £200 would be saved - it is what has happened to most of my last payrises.

Lemonsqueezer78

I wouldnt trivialise it all down to "a few new pieces of outdoor clothing and a few extra meals out"

Another way to look at it might be, your boss's extra £566 pm essential pays for ALL their fixed monthly utility bills - council tax, gas/leccy, water, home insurance, mobile phone, car insurance, Car Tax, TV license, Cable/Telephone/Broadband, lottery, pet insurance... etc

For me, all those bills come to £558.

I took a promotion once that increased my salary by £15,000 overnight. I was thrilled...but my lifestyle didn't change at all really, with the exception of my rent changing by around £150 pm. I saved almost all my surplus money which helped me put a large deposit down on a house.

Newyorkdreams

There is not just the actual £10K difference but the future earnings at a higher rate which they will be closer to than you, given that they have taken on all the extra responsibility and stress. It's not always about the money, it's about having drive and ambition and wanting to better yourself. I've taken on more responsibility and stress for no extra cash to further my career. I guess I must me mad!

Jeems

Its about living within your means and not going crazy regardless of your income. Being self employed, my income can be up or down. My monthly expenses including going out come to around £1000 - if I earn £1500 that month, I save £500. If I earn £10,000, I save £9500. That way, I know I'll be able to afford it any unexpected payments/holidays/luxury.

HappyMJ

Jeems wrote: »

Its about living within your means and not going crazy regardless of your income. Being self employed, my income can be up or down. My monthly expenses including going out come to around £1000 - if I earn £1500 that month, I save £500. If I earn £10,000, I save £9500. That way, I know I'll be able to afford it any unexpected payments/holidays/luxury.

This...^^^^

Between us we spend around £1,300 a month on bills including going out expenses. No matter what we earn that's what we spend.

As I'm self employed too sometimes I don't work at all and therefore bring home very little (it's actually about £600 doing nothing) and other months it might be £3,000. We will always spend £1,300 per month. Over the year it averages out.

PasturesNew

For many, after basic rent/mortgage/council tax and basic utility bills and basic food for the month, without any treats, you're left with about £100 (if you're lucky) .... so to then have another £283 would seem like you're absolutely loaded.

You could have a holiday; go out for a meal at Wetherspoons without checking the prices before you see what your budget buys you; have your hair cut at a proper salon. All sorts of wild and exciting things!

AnotherJoe

ClarkeKent wrote: »

Interested to see the other day that an extra £5k in salary gets you around £283 after tax per month. Even less once you hit that 40% barrier.

Got me thinking about that boss that earns £10k more than you and gets a whole load of hassle and stress. Basically he/she gets a few new pieces of outdoor clothing per month and a few more meals out and then he/she is essentially on the same wage as you.

As many earn more we become more frivolous and are blowing away the extra cash and essentially pulling the same wage but with more stress.

Thoughts please?

That extra £5k in salary could get you £5k or more in your pension every month. In ten years you could have an extra £75k in your pension. The boss who got £10k more and put it all into a pension would in 20 years likely have £300k more in their pension. They could retire much better off, or earlier, or both.

Or it could fund a bigger mortgage for a bigger house which means when you retire and downsize you have a large tax free lump sum to play with.

Or it could find a quicker pay off of a mortgage which gets you to being mortgage free and closer to retiring earlier, by several years.

It's only by having a mind set of chucking it away on frivolous or short term items rather than investing it in longer term plans that it appears inconsequential.

lambda

theoretica wrote: »

Many people are very bad at managing their own finances, and advertisers are amazingly good at persuading us we need stuff which we don't even want.

I find that people are absolutely terrible at managing their finances. I mean, if you were the CFO of a company reporting the financials to a board, you wouldn't stand up and say 'oh this month I think we'll just wing it. Yes, we'll just spend money until our bank balance gets to 0'. No, you would budget and plan every penny, otherwise you would be fired. I don't see why people don't do this on their own incomes.

I know people at work who are on good incomes. There is a guy in particular who I know doesn't budget, buys lunch every day, spends a fortune on food, etc. He was complaining to me the other day that he could only afford to buy one airfare ticket for his holiday, and not the return flight. Bearing in mind he goes to the same place on holiday at the same time every year. I mean, if you know that why not plan for it?

Another example, I have members of my family who I would say bring in a very good wage. Heck, if I had that money I would be very happy. But no, what do they do with it? Buy a huge house, buy brand new cars every couple of years on leases/PCP. Then moan that Waterstones is too expensive. I mean, if you didn't have two massive car payments and a huge mortgage payment coming out every month, you could buy that book from Waterstones and not care.

Sorry I am ranting. Getting out of debt has really taught me the lesson to understand the value of money. Budgeting and planning is everything. I think 99% of people don't do that. They just spend it. Perhaps they put a little aside for savings, but I think most people don't plan and just buy things. The more people earn, the more c**p they tend to buy.

Helvetica_Van_Buren

ClarkeKent wrote: »

Interested to see the other day that an extra £5k in salary gets you around £283 after tax per month. Even less once you hit that 40% barrier.

Got me thinking about that boss that earns £10k more than you and gets a whole load of hassle and stress. Basically he/she gets a few new pieces of outdoor clothing per month and a few more meals out and then he/she is essentially on the same wage as you.

As many earn more we become more frivolous and are blowing away the extra cash and essentially pulling the same wage but with more stress.

Thoughts please?

I had a detailed answer written but deleted it because the following will do:
I don't think you know what you're talking about.