Minimum salary required in London: £500k? | Hacker News Reader

Minimum salary required in London: £500k?

firevlondon.com

29 pointsedward92 comments

Tldr: no, but if we redefine "live in London" as "live in Zone 1, take family of four skiing in France four times a year, send kids to private school from age 3, always eat at Michelin starred restaurants, own multiples of everything Apple ever releases, any other stupid consumerism you can think of" then yes.

Exactly. I've got "2.4 family" friends who live in Clapham and Walthamstow, earn about £60K between them and live comfortably. Would they like to have £500K salaries? Of course. Do they need them? Of course not.

Real estate is the biggest struggle.

A 3.5-bed family home in Clapham is around £1m, a 4% payment on which would consume their entire net income!

source - http://www.londonpropertywatch.co.uk/avg_prices.html

Spending quality time with family doing outdoors activities, ensuring good and safe care and education for your children, eating quality food at fine restaurant, buying quality electronics, etcetera are actually the complete opposite of "stupid consumerism".

Sounds like an excellent way to spend your money if you have it.

None of these activities, as you've phrased them, are particularly expensive. Doing them the way OP phrased them, i.e. the most expensive way possible, is what I think is meant by stupid consumerism.

Why was this comment downvoted? Genuinely curious.

Is merely entertaining a notion of living above £50k subsistence unacceptable in this community?

Because you don't need to spend that much to do any of those things. It would be an interesting article if it actually addressed the minimum income needed to achieve that lifestyle.

Minimum salary required to be a part of Boris's and David's circles.

How do you define smart consumerism? Or do you just hate consumerism in general?

I suppose I'd call it smart consumerism if you know which bits are optional and are not arguing that it's impossible to live without things that 99% of people will never have. Do regular ski trips sound awesome? Yes. Would I ever list them in my "minimum possible lifestyle"? Hell no.

I just about to buy a house outside of London. I'm also about to send my 2 kids to private school as all the decent local state schools are full with waiting lists (thankfully a lot cheaper than the figures mentioned here). I had a look at one of the options for commuting into London. This is the quickest option from where I am (via HS1). I'm already up to the following monthly expenses:

Mortgage: £3200

School Fees: £1375

Travel: £450 (next cheapest is £300)

Insurance: ~£300 (Critical Illness, Life insurance)

Bills: £1500 (guestimate)

These are a mix of expenses I'll have to pay personally, and some that I can pay as business expenses.

So I'm up to £7k monthly outgoings already, without even trying. In reality I'll need to add another £3k ish for loan repayments and other bits. As a contractor I'm able to be quite tax efficient, but as a single salary earner, http://www.thesalarycalculator.co.uk/salary.php tells me I'd need to be earning > £200k to cover this.

I could economize. I could get a cheaper car for example and I could have bought a cheaper house - the one I'm buying certainly isn't a palace though.

But, yeah - London is expensive!

School fees for two of £1375 a month seems pretty reasonable compared to what I thought. What kind of standard of school do you get for that? What age? Day or boarding? Does that include things like uniforms, sports and trips?

It's a small independent primary school founded 80 years ago and still located in the original founder's house (and out buildings). It's a non-profit so all fees go to the upkeep of the school. Classes are about 15 students. Those fees don't include any trips or uniforms I don't think, and it's about a mile from the house we're buying so it's definitely day :-)

The main thing that's attractive about it is the focus on the "person development" side of the child's education (in addition to excellent academics). Last time I went to my oldest daughter's parents evening the whole content was: "Well, she's at so-and-so percentile for this subject and such-and-such metric this and that". Nothing at all about how she is as a person, or anything beyond the metrics that Ofstead judges schools on. She's 7!

I earn 1400euros of net income monthly. My mother earns around 500euros of net income monthly. Thank you for showing me my shitlife in Slovakia :)

It isn't all that - I didn't mention that I feel pretty scared about the prospect of hanging that noose around my neck for ~ 25 years. Once I'm on the hook for this much money I'm pretty much tied in to a certain type of job for a certain type of (big) company in a small geographic area that mostly necessitates a long commute. I haven't yet convinced my self that I'm making the right choice vs the frugal/simple life with more freedom.

Time will tell I guess.

Really? A mortgage repayment £3200 implies a mortgage amount of £800,000.

Most people I know don't have houses costing that much, even in London.

for a family home near London? I could see it coming close to that.

I have a small deposit :-)

My mortgage is nearer £600k

How the fuck are you spending £1,500 on bills per month?

What bills are you including there - just utility and ctax, or food as well?

Bad terminology: I meant food and utilities.

The degree of entitlement evidenced by this article is seriously distasteful.

If private school from age 3 is part of a "minimum" lifestyle, exactly how does the author describe the lifestyle of all the kids who go to state schools?

Zone 1 indeed.

The author is describing their friends, not themselves. It doesn't sound entitled to me to describe what they're witnessing and wonder about the figures. The discrepancy comes from that being described as a "minimum" (and thus linkbait headline) when really it should be qualified at all levels as minimum for that lifestyle.

Sure, you can minimise the relevance of the "discrepancy" and claim that the author isn't entitled, but the entire enterprise of this article is based on the premise of discovering whether these really are the "minimum" living costs. Is it a "discrepancy" or is it the way the author sees the world?

The end of the article even asks: "Frugalists: With such a cost structure, where would you start saving first?"

Not "lower earners", but "frugalists". That's people who earn £500k but don't necessarily want to spend it all. The author isn't even addressing the paupers who only earn £250k, or the near-beggars who only earn £100k.

From memory, "minimum" was the term used by his friends. It's more about them than the way the "author sees the world".

I think you're reading too much into someone's exploration of a particular situation. It remains an opportunity for you or anyone else to run through the expenditure of any of those other pricepoints you mentioned. Though obviously they are unlikely to reach HN because they're not quite as exciting or outrageous.

   I think you're reading too much...

The author has thought about, analysed, and written an essay on this subject, using the word "minimum" regularly (including in the title) and not once gave a single nod to anyone earning less than £500k/year... then going on to address people that wanted to consider spending less as "frugalists".

Maybe you're right, maybe I'm just primed to think the author entitled because they self-identify as a "High net worth personal finance blogger".

The article is also making an assumption that people on £500k a year are using the NHS. Unless you're Mrs Miliband private health insurance is almost certainly going to be part of your employment package, because if you're earning that much then the productivity hit of waiting for NHS treatment is likely to be more than the cost of private health coverage.

This is another reason why I love living in Edinburgh, the salary difference is far smaller than the "nice life" cost of living difference.

Upvoted for Edinburgh. It's lovely here, affordable by comparison with the south-east, and has a reasonable tech centre. Still trying to find the startup clique, though; is there an "HN Edinburgh"?

Checkout techmeetup.co.uk

I would asssume that the £30k without paying income tax

  Very comfortable life: £30k per year.  Which still corresponds to £40k gross salary (roughly 1.5x statistical median wage), but with tax-efficient asset allocation you can relatively easily achieve £30k per year without paying any income taxes

comes from drawing down savings rather than earning income? At £40k annual income, your effective tax rate is 14.7%[0], so without complicated self-employed tax reporting (deducting most of your expenses), I don't see how you can reduce taxes on earned income. Sure, the ISAs (read: tax-free savings accounts) give you tax-free earnings, but they haven't been around long enough for you to make all of your income from them[1].

0 - https://www.gov.uk/income-tax-rates/current-rates-and-allowa...

1 - https://en.wikipedia.org/wiki/Individual_Savings_Account#Ori...

£40,000 of salaried income is currently £30,287 net, after £5,880 income tax and £3,832 national insurance.

Ahh yes, I keep forgetting about national insurance, the other income tax! ;^)

Crap man, and when I was earning a modest (by comparison) 45k I thought I was decently well off.

there is something to be said for the house prices though, I would never go back on anything less than 80K.. I don't mean that in a snobby way- I simply mean my standard of living outside of london would equate to 80K of salary -inside- london. I don't expect people to pay it.

it's scary the beast that london is.

For any given number I'm sure you can come up with a lifestyle that costs that much. Costs expand to consume the money available. So I don't think anyone will ever reach financial independence "without changing your lifestyle."

There are always things you would have spent the money on. The trick is deciding which you care about, and whether you value them more than independence.

I would say 50K is required to live well in London and 20K as a minimum salary. 500K as a minimum is ridiculous.

The article is a bit hyperbole but truthfully folks do think like this. My other half has bought into the private school and insanly priced brands mantra. Everyone successful and older than us is saying you _need_ to send your kids to private school pretty much from the start, but I can't really do the Math and see anything but a life of struggling for money it requires.

Combine this with property prices and I'm actually willing to believe the £500,000 figure isn't far off to have the same life as their parents generation have been able to achieve, but alas I grew up poor and I don't subscribe to needing any of this sillyness.

£20k is a much better estimate. A twentysomething without children can live comfortably on that -- with plenty of money for drinks, gadgets and eating out.

I think that's overstating it. My first job in London I was on £28k and I was ok but wouldn't want to go lower. Take-home pay was about £1800/month, I spent £850/month rent (Zone 3, noisy loft conversion in an old building), maybe £450/month general shopping (food and clothes and the like), £200 going out and the rest on occasional stuff like a computer or holidays.

You can live much cheaper - I've seen 11k claimed by someone who shared a tiny basement and cooked all their own meals off the cheapest supermarket food - but you're making significant lifestyle compromises.

That's pretty much the average graduate starting salary in London, so plenty of graduates are earning less. I started on £24k in 2008, but I shared a flat within cycling distance of work, which significantly reduced my expenses — £407/month in rent, plus £60/month in bills.

I'm a PhD student in London, on £18k albeit with no income tax. I'm surprised you paid so much on rent! I'm paying £600/mo (including bills), Zone 3.

Maybe I'm more frugal than I realise.

Are you paying national insurance on your income? Otherwise, without income tax and national insurance, you're effectively looking at a wage of £22k, and from what you've said thats just for a flatshare studio room.

Do you get any meals subsidised from your university, and do you actually have some savings while being able to eat out or get drinks at least once or twice a month?

Fair point! I am not paying NI.

I don't have any meals subsidised, and I do have savings -- about £3k/year. I eat out twice per week, and I get drinks more often than not -- although I do often get drinks quite cheaply, because I'm friends with some brewers.

PHD stipends are conveniently tax and NI free.

I wanted to live on my own, I could probably have paid <£600/mo in a shared house (indeed I did for a bit, but I hated it). Again, lifestyle choices.

http://www.entitledto.co.uk/

On a salary of £20,000 a single person living in SE1 would be entitled to £58 a week housing benefit.

Sure, I was comfortable on £24k just after graduating... but I was still living in a basement of a student house, making my own lunches, had no kids, rarely bought clothes, and never went on holiday.

How much is that person spending on rent in London?

Between £1k and £2k. You'll be a frequent customer of Wonga.

Edit

Proletariat: http://www.rightmove.co.uk/property-to-rent/property-5304414...

Bourgeois: http://www.rightmove.co.uk/property-to-rent/property-5061904...

your Bourgeois link is not even in London....

For a family with Kid, youar completely missing it: Preletariat 4k : http://www.zoopla.co.uk/to-rent/details/37300477?search_iden... Bourgois: 6.5k: http://www.zoopla.co.uk/to-rent/details/37341550?search_iden...

It definitely is. If you can vote for the Mayor of London, then you live in London.

"Richmond is a great location. This property benefits from a spacious luxury bathroom, and a generously-proportioned outside courtyard."

Nonsense. If you use some common sense in choosing where to live, you can easily find places in Zone 3 at about £400/mo.

Not sharing? Pics or it didn't happen.

Definitely sharing! Perhaps this is why everyone's estimates are so much higher than mine? It seems obvious to me that the best option is to share a flat.

It is the best option, if you're a single male able twentysomething. I had some good houseshares in Cambridge. But it's not for everyone and completely incompatible with children.

Fair point. Note that I did say, in my top-level comment, "twentysomething without children". I should have also said "able-bodied". Male/female, I'm less convinced of -- there are plenty of all-female flatshares.

Thanks for a very reasonable reply; I'd lost track of the original comment and that you were its poster as it's a long way up the tree, sorry.

If you're a single twenty-something you can flatshare and spend a third of that money.

I guess if you earn 20K there are still a few fine bridges in Zone 1.

I spend £600/mo for a studio in Zone 3, with its own shower and bathroom.

£650/pcm for a studio (with kitchen AND bathroom!) on the edge of z2 (GNW is z2/z3, BKH is z3, both walkable).

(Hasn't really gone up from the £525 it was in 1999 because my landpeople like an easy life and I'm no trouble.)

I should also chime in and say that even for people living in London and sending their children to private schools these estimates are very high. I was luck enough to go to Eton and honestly, for most parents it was a question of affording the fees by: a) not spending that kind of money on other activities; b) lifelong saving; c) selling substantial assets (like second houses etc...); and d) inherited wealth and/or generous grandparents.

It was fairly uncommon for student's fees to be paid out of parents' salaries. I would guess (very anecdotal!) that £500k is well above the median annual salary for those parents.

Also - apparently this person hires babysitters for >350 nights a year .... o.0

You can't really base what's happening today on what your parents have done. The property boom would have given people your parents age easy access to large sums of capital which would allow them to afford the likes eton.

Of course, once people realise if they can't see the property, then it's not really worth that much, this problem will go away.

Is that double-counting babysitting and sending the kids to boarding school? It's certainly a tradition of the English aristocracy to spend as little time with your children as possible.

Haha - I hadn't even considered this. So yeah - the cost of childcare is largely not going to overlap with the cost of private education (where that private education includes accomodation of course).

Scholarships still in evidence at all?

Absolutely! For a start 17 students each year are fully funded. Then there are 25 additional fully funded scholariship students are taken on at the beginning of the penultimate year (called 6th form year in the UK).

Added to these are are lots of partial scholarships available, though the ways in which these are funded and obtained are a little more roundabout. The Music department in particular often gave prospective students scholarships of up to 90% of fee totals.

Good to hear that. Helps to keep the charitable status I suppose.

god...you know how hard is to make 250k in London?? this article is stupid. to give you an idea a well paid devops job that woudl pay about 130 in the US , pays about 80K GBP here in the UK. 250K is for bankers or something man this article is bollooooooox

Devops contract rate seems to be around £450/day (at the low end). Assuming 21 days per month and 2 months off per year, you'd be looking at £94500 revenue. As a contractor you could expect to pay as little as 25% total tax, but if we assume 30% you're looking at taking home £5.5k per month. Which is a grand more than an £80k salary (with an extra month off).

If you're married and have your SO as a shareholder, thus splitting the tax load you can almost match a £200k salary on a day rate of ~£700 (I have seen a few devops type roles getting up towards that figure).

So, I agree that £250k salary is very top end, but there are certainly contracts in the finance industry that pay enough to get you close if you change the way you're paid.

i think the article said that you need 500K a a year. So you have to marry a devops person too, on a contract. the odds shrink a lot the couple isn't a homosexual. Where you need to find a devops woman that makes 500GBP an hour....

Drug dealers are doing OK.

That is nowhere near a minimum salary required. Private schools and £300 a week on groceries, and 20K a year on holidays!??!

Minimum salary to live that particular lifestyle.

20k/year on holidays might be realistic for a family of 4-5 depending on where they went. If they're teenage children, you're getting family suites or two hotel rooms and could easily pay $400+/night.

3-4 trips totalling say 25 days. Airfares add up for 4-5 people. $3k+ on airfares, $10k+ on accommodation. Four people eating out 1-2 times/day. Car hire (SUV rather than a hatchback to fit all luggage), entertainment, etc.

I earn peanuts compared to those examples but just had a trip to the States with wife, toddler and infant. Probably cost $20-30k in one 8 week trip and that was without the fourth airfare and generally cramming four of us into budget hotels where possible.

Title should be 'Minimum salary required in London to live a life of luxury: £500k'

Amazing, really tells more about keeping up with the Joneses and the societal pressure to conform to their expectations.

As you earn more money, your social circles change and there is a cost to moving into that circle. You have to live in the right area, dress in the right clothes and drive the right car. So the costs increase to levels that seem exorbitant to people on "average" salaries but really they are just as much slaves to the system as anyone else.

The trick is to earn good money and not spend it on frivolities, but marketeers and advertisers work hard to get people to spend their hard earned cash to great effect.

For comparison purposes, if one wants a benchmark for a top notch salary, then it is common practice to use the salary of the Prime Minister, who earns £142k.

Weirdly, that's not even the highest salary in the public sector. And you occasionally get MPs complaining that it's "not enough to live on" (which in comparison to the £500k couples it isn't). Malcolm Rifkind got himself in the news lately for hiring himself out and saying "I'm not paid a salary", while earning £67k for being an MP and ~£110k for being a nonexecutive director of Unilever a few days a week.

At least the job of PM comes with the use of two houses and a car.

Note it is £500k which is more than $750,000.

wtf. They're not entitled to keep this stupid and absurd way of living, they don't NEED 500K. I don't care if "their friends" live like that and it's normal between them!! The world is fucked up. this depressed me.

So, everyone here is bothered that people like to eat well and take family vacations (is this really your definition of "luxury" lifestyle? You guys sound like coal mine workers.)

But you're all perfectly fine with the government taking close to half of that income in taxes.

Were you all raised in a communist regime?

People scoff at these articles because they give the impression that the people involved are barely able to scrape by. The "we know how poor people feel because after our 2x mortgages 4x holidays 3x private school fees 3x car expenses and 2x weekly nights out, we don't have any money left either" syndrome ;) (A line of thinking that is surprisingly common. Keep an eye out for it!)

This tends to amuse me, but it does seem to make some people angry. Few of them seem to be in this thread, though. Certainly not enough to count as "everyone here".

"Were you all raised in a communist regime?"

No, just in an ordinary family at around median income for the UK. We ate well. We had holidays (not so many foreign ones during the days of exchange controls).

I resisted the temptation to reply in a humourous way to the parent post out of respect for HN norms. I could have mentioned those Three Yorkshiremen and The North.

Like it or not, it's a lifestyle that only about 10% of the UK can afford. £20k is the holiday budget for a whole decade for most people. And that tax number includes healthcare and pension.

Oh, I fully agree with that - in fact, in certain other European countries it is more like 0.10%, but that's not the point.

The point is - I don't understand all the whining going on here.

If I make £500K a year, and I gave it up for £20K a year, would that really make any of you better off? REALLY?

Replacing the £500k job with ten £50k jobs would make at least nine people better off, yes. The ten people could then manage at least four hundred hours a week of work. It's strange how indivisible the really high paid jobs are.

Given that London house prices are a function of supply and demand, if everyone on £500k did that then I personally would be a lot better off.

Alas, I suspect supply will be very carefully managed to ensure that voters in the UK do not have their main asset devalued over the next 10 to 15 years or so.

After that, enough younger people will be renting for the balance to flip and the price correction to occur.

Whilst population continues to rise, you'll be waiting a long time for your "correction".

What % of average wage do you think people will want to pay for housing? What is the limit? There has to be one.

Average wage has very little to do with it, at least when it comes to London. People there pay a lot more than the rest of the country, but they're earning a lot more too. And even within London the same kind of logic applies.

So what happens when you have no teachers, no retail staff, no police, no ambulance and no refuse collectors?

Really: there has to be a limit.

Partly those people's wages rise. But more commonly they live elsewhere. Those people's wages have no connection to the house prices in zone 1, because those people live further out and commute.

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