If you are one of Britain’s top 1% of earners with a £100,000 plus salary, apparently a six figure income doesn’t go that far towards paying school fees and maintaining a large home.
The families feeling the pinch earn between £100,000 and £370,000, according to a new study.
The top earners may take home up to 14 times more in their pay packets than the average worker, but still find maintaining their lifestyle a financial stretch.
In a new book Inequality and the 1%, Danny Dorling, a geography professor at Oxford University, argues that these substantial salaries are still not enough for many high income families.
Although their earnings are significant compared to most families, they still can’t compete with the super-rich, like celebrities, sports stars and bankers who make up the next half percent of the country’s wealthy with their multi-million pound a year incomes.
Lost spending power
In real terms, he explains, these families have lost financial ground over the years due to inflation.
A couple with no children earning £160,000 a year today have lost spending power and are often resentful of paying so much tax to subsidise benefits and services for couples who are earning less.
These upper middle class families are in high-powered jobs, such as lawyers, accountants and senior executive posts and mainly live in and around London, where house prices and the cost of living are higher than the rest of the country.
“Living a life of luxury is not as easy as many on a lesser salary think,” he said. “The top 1% earners pay more tax and have to pay more for their homes and lifestyle and often feel they have worked hard and striven for a better life but feel less well off than they really are.
“In their minds, they are unfairly treated because of how much they have to pay out to stand still and realistically they know they will never move up to into the super-rich bracket.”
Less is more
Sometimes, less is more. This was demonstrated recently by Foreign and Commonwealth Office minister Mark Simmonds complaining that although he and his wife earned £140,000 a year between them, they struggled to make ends meet after paying their monthly bills.
“Many workers on an average wage have little sympathy for families that moan because they have to maintain a large home or pay school fees,” said Dorling.
“But many are realising that if they switch their high profile post for another career that they have more time and money than if they work to their full potential.”