What level of salary makes you rich

[RichmondCommu]

In the circumstances described they would not be "rich" but would be "well off". You may not consider this well off, but it is an absolute fact that they would be well off, in relative terms.

How is it an absolute fact that they would be "well off"?

 

[RichmondCommu]

Taking a basic case, if you live a 30 minute commute out of London you will have season ticket costs of up to 2.5k, and extra costs of housing compared to the national average of at most 14.5k (that's £200k on a repayment mortgage with a pretty pessimistic interest rate). Add on tax at 40% you get 28.3k, leaving you with at least 51.7k. That's really quite a lot more than the median salary - if you take slightly more realistic numbers you'll be on around double it. On top of that you are also building up £200K of additional value in your house, so when you come to retire you can sell up, move somewhere cheaper and fund a chunk of your pension.

I think you are struggling to calculate tax because I calculate the net wage after tax to be £54180. Not only that but how did you get to your figure of £14.5k as additional housing costs? If you take the East Midlands as an example a three bed semi in a decent area will cost around £200k and yet a similar property in a similar area 30 minutes from the centre of London will cost £500k.

 

[fowler9]

I think all we can take from this is that it is very different for everyone. As I said £50000 a year would let me do pretty much whatever I want and save a hefty sum for retirement. For my mate and his wife with 2 kids on the way in Weybridge they would probably be wondering where the next meal is coming from.

To re frame the question to what would be very rich compared to most people in my opinion then perhaps a few million a year, first class flights everywhere, perhaps a small yacht, 5 star holidays several times a year. I was going to throw in a private jet but even some extremely wealthy people can't afford them. Then again there is the difference between wealth and income.

 

[takno]

I think you are struggling to calculate tax because I calculate the net wage after tax to be £54180.

I divided the additional 17k cost by 0.6. No idea what you did. Interesting that you went for a semi in a good area - I'd call owning a semi in a good area in an expensive part of the country doing rather nicely for yourself.

 

[Crossover]

I'm not sure I can answer the poll - it really is dependent on a number of factors as already said

Possibly a little off the direct topic and a touch political but something I thought about when at uni as the likes of bursaries and other funding were (I presume still are) means tested. The assumption was that high income families would support their offspring on account of the high earning and therefore the student received less other funding. What it didn't take into account, however, is one family earning above the top band could have high costs (other kids, high mortgage or rent payments etc) and have little spare money, whilst another with a lower combined income and entitled to additional funding may be in a 'better off' position than a family such as the first example

 

[RichmondCommu]

I divided the additional 17k cost by 0.6. No idea what you did.

I used a tax calculator web site. I've still got no idea what you did.

 

[RichmondCommu]

Interesting that you went for a semi in a good area - I'd call owning a semi in a good area in an expensive part of the country doing rather nicely for yourself.

In actual fact I used the example of a semi in a decent area, both in London and the East Midlands. Owning a three bed semi in a decent area 30 minutes from the centre of London is not what I would call "doing rather nicely for yourself". All I've done is be realistic in terms of a decent family home in a decent area, both here in the SE and further north.

 

[yorkie]

How is it an absolute fact that they would be "well off"?

They would be in a favourable situation or circumstances compared to the average person.

So, in relative terms, they would be well off. You wouldn't see it that way, but that's different.

 

[najaB]

Two questions come to mind looking at the poll results:

1. Is there a north/south divide in the voting? I know (or have a rough idea) where in the country a few of the members reside and it does seem that the 'rich threshold' gets higher as you move southwards.

2. Does the 'rich threshold' reflect the actual household incomes of the posters in any way? The reason I ask is because a very similar question was posed to a few hundred (possibly thousands) of people in a study a few years back. It went something like: "What's your household income? What household income would you like to be comfortable?"

In pretty much all the cases the answer to the second question was around 10-20% more than the first. So the person earning £20K wanted £25K. The person earning £50K wanted £60K and so on.

 

[Xenophon PCDGS]

Is there a north/south divide in the voting? I know (or have a rough idea) where in the country a few of the members reside and it does seem that the 'rich threshold' gets higher as you move southwards.

Speaking from a personal point of view, there are enclaves in "the North" that are an exception to your rule, such as the area known as "The Cheshire Golden Triangle", within which I do so reside.

 

[ComUtoR]

2. Does the 'rich threshold' reflect the actual household incomes of the posters in any way? The reason I ask is because a very similar question was posed to a few hundred (possibly thousands) of people in a study a few years back. It went something like: "What's your household income? What household income would you like to be comfortable?"

My income is listed and in no way do I consider myself rich or even remotely 'well off'

I defined 'rich' by what can be seen on programs like this :

http://www.imdb.com/title/tt0086750/ Lifestyles of the rich and famous. (for the older generation)

http://www.imdb.com/title/tt5158164/ How the other half live (for the modern generation)

Watch any of those 'lifestyle' shows about 'Rich' people and money and realise what 'rich' is truly defined as. I also think that the rich threshold has moved considerable since I was a kid. A million quid will barely buy you a house and car. Then you still have to run them.


https://www.lamborghini.com/en-en/
http://www.bugatti.com/home/#video

http://www.sothebysrealty.com/eng/sales/gbr
http://www.christiesrealestate.com/eng/sales/eng

How much would you need to earn to own and run those ?

 

[Qwerty133]

Agree entirely, which is why I think family income should be assessed (as in parts of the USA) rather than individual income.

Disagree. Especially with the push to reduce immigration by-choice non-working spouses of working age is not something the country can afford and should be discouraged.

 

[87 027]

Until 1990 the income of a husband and wife were added together and the combined amount was subject to income tax. Independent taxation of husband and wife was one of John Major's tax reforms when he was Chancellor.

 

[DarloRich]

They would be in a favourable situation or circumstances compared to the average person.

So, in relative terms, they would be well off. You wouldn't see it that way, but that's different.

surely relative to the local, rather than national, average.

For instance if i lived in Darlington on £50k per year i would be very well off and have a disposable income level that was quite high.On 50k per year in Milton Keynes I would have much less disposable income due to increased housing and travel costs. Lets look at housing costs. Using Rightmove as the comparison and using the same kind of 2 bedroom terraced houses i lived in in Darlington and now own in MK.

I can pick up a 2 bed terrace house in a rougher part of Darlington for c.£40k. C.70k buys you a house in a better area and C.100k gets you a really nice large terrace with a big garden or a decent sized semi. In Milton Keynes £120k buys you a 2 bed shared ownership property. A similar type of property to mine in Darlington costs c.£220k and a really good/big one costs c.£235k.

My house cost less than those. it needed a complete rebuild from the inside out, a strip back to bear brick and the installation of new everything. I got mine at a substantial discount due to the level of work needed ( doubt anythng had been done sice the early 80's) and it was absolutely everything I could afford and the ONLY house I could afford. it took 5/6 years to save the deposit.

So what about renting? Renting the same 2 bed house in Darlington costs ( again using a section of areas) 300 & 425 per month.

In Milton Keynes that rental figure is £495 for a single room - often Mondya to Friday only! A flat above a shop is about £750pcm, new houses about £800 pcm, a terrace about £900 pcm and a large flat about £1000 pcm with servcied & furnished appartments over £1750 pcm!

quite a difference!

 

[Barn]

Does the 'rich threshold' reflect the actual household incomes of the posters in any way? The reason I ask is because a very similar question was posed to a few hundred (possibly thousands) of people in a study a few years back. It went something like: "What's your household income? What household income would you like to be comfortable?"

In pretty much all the cases the answer to the second question was around 10-20% more than the first.

Backing up your theory is the point that £80k is roughly 10% above the salary of Labour MPs.

 

[RichmondCommu]

They would be in a favourable situation or circumstances compared to the average person.

So, in relative terms, they would be well off. You wouldn't see it that way, but that's different.

The problem is a fancy definition doesn't always bear any resemblance to the situation that some people living on £80k in the SE find themselves in. Off the top of my head the average wage in inner London is £34k so according to the above definition someone earning £40k would be well off and yet in London no way is that true.

Incidentally, I find it very sad that families cannot afford to replace bike chains or pay for simple sports equipment. Serious question here; do you know of a charity that helps to fund such equipment as I would be willing to help.

 

[DynamicSpirit]

To my mind, the poll looks like a trick question, because I've always understood 'rich' to be a description of wealth, not of income.

It's very hard to pin down precisely, but I suspect if I had to attempt a precise definition of the word, it'd be something like

int houseCost = GetTypicalCostOfHouseBigEnoughForYourFamily();
bool isRich = (totalAssets - houseCost - totalLiabilities) > 1000000;

In other words, add up the value of everything you own including your house(s) if you own any. Subtract from that the average cost of a reasonable house in your locality that's big enough for your family, and any debts you have. If the result is more than a million quid, then it would seem reasonable to count yourself as being 'rich'.

Note that there are no value judgements implied here. I find it sad that in some circles, 'rich' has almost become a term of contempt - when of course in reality there is absolutely nothing wrong in principle with being rich.

 

[fowler9]

To my mind, the poll looks like a trick question, because I've always understood 'rich' to be a description of wealth, not of income.

It's very hard to pin down precisely, but I suspect if I had to attempt a precise definition of the word, it'd be something like

int houseCost = GetTypicalCostOfHouseBigEnoughForYourFamily();
bool isRich = (totalAssets - houseCost - totalLiabilities) > 1000000;

In other words, add up the value of everything you own including your house(s) if you own any. Subtract from that the average cost of a reasonable house in your locality that's big enough for your family, and any debts you have. If the result is more than a million quid, then it would seem reasonable to count yourself as being 'rich'.

Note that there are no value judgements implied here. I find it sad that in some circles, 'rich' has almost become a term of contempt - when of course in reality there is absolutely nothing wrong in principle with being rich.

Personally I don't think it is sad that rich is a term of contempt when billions are living in abject poverty while a small number have many times more than they need. Especially when the system is set up to keep it that way. Come judgement day I forgive the philanthropists. A man cannot posses more than his heart can love.

 

[EM2]

Until last year I was earning mid-30s in London whilst supporting a spouse who can't work for health reasons in a modest home in a not particularly salubrious part of London. I had a brand-new car on that income.
No kids, admittedly, but I'm pretty sure that with two children I could have lived pretty comfortably if I had an extra 50k on top.

From https://www.moneyadviceservice.org.uk/en/articles/childcare-costs#how-much-does-childcare-cost
£148.16 per week x 2 for 48 weeks (because I get four weeks annual leave) = £14,223 a year.

I just realised that in this scenario that I outlined earlier in the thread, we were talking about one parent being unable to work, so there would be a much-reduced need for paid childcare.
With that in mind, the £204 a month that's left over could be up to £1300 a month.

 

[najaB]

I just realised that in this scenario that I outlined earlier in the thread, we were talking about one parent being unable to work, so there would be a much-reduced need for paid childcare.
With that in mind, the £204 a month that's left over could be up to £1300 a month.

Single parent household?

 

[EM2]

Single parent household?

That's a different scenario entirely.

 

[Jonny]

Other:
It depends on how much capital you have.

 

[Xenophon PCDGS]

A man cannot posses more than his heart can love.

But who is to say how much anyones' heart can love? Human nature being what it is, some have a far greater capacity for love than others, in the same way that some have a far greater capacity for hate than others.

 

[Xenophon PCDGS]

Other:
It depends on how much capital you have.

Assets of all kinds in their many varied guises also need to be considered.

 

[fowler9]

But who is to say how much anyones' heart can love? Human nature being what it is, some have a far greater capacity for love than others, in the same way that some have a far greater capacity for hate than others.

Indeed, and why would a cynic look for a coffin upon smelling flowers? The statement on its own is meaningless.

 

[Xenophon PCDGS]

Indeed, and why would a cynic look for a coffin upon smelling flowers? The statement on its own is meaningless.

Even with my noted powers of making ethereal contact with "all things on a higher plain", even I would admit to being hard-pressed to contact that eminent American cynic, H.L.Mencken, to explain himself over the matter of the quote in question, as he died on 29th January 1956....

 

[fowler9]

Even with my noted powers of making ethereal contact with "all things on a higher plain", even I would admit to being hard-pressed to contact that eminent American cynic, H.L.Mencken, to explain himself over the matter of the quote in question, as he died on 29th January 1956....

Ha ha, it would be a struggle.

 

[Fery]

With Labour proposing an increase in tax for those earning over £80k there has been a lot of debate about who are the rich. So at what level of income do you think people should be regarded as rich?

Rich is relative. Give a millionaire £200K a month and he'll need treatment for his depression, because he earns such a little amount - and give £30K to a factory worker who's on a minimum wage, and he'll be over the moon and consider himself rich. Now to answer your question, relative to the UK average salary, I believe rich would be somewhere over £100K a month, that would leave you with well over £5K a month net salary after tax and national insurance (calculated with income-tax.co.uk ). With £5K, you can definitely live comfortable, and a rich lifestyle, even in London. You could afford a mortgage for a nice house, a nice 7er BMW or Audi A6, and could still have a few thousands to spend. That for me is RICH.

 

[Bletchleyite]

I think being rich is more about having high disposable income. So somebody living with their partner (who also earns) in rural Cumbria on £50K may be fairly rich, but a single person living in London on £50K, while not *badly* off, is not going to be what I'd call rich.

I think I heard it quoted that paying more than a third of your income on keeping a roof over your head is housing poverty?

 

[Bromley boy]

I think being rich is more about having high disposable income. So somebody living with their partner (who also earns) in rural Cumbria on £50K may be fairly rich, but a single person living in London on £50K, while not *badly* off, is not going to be what I'd call rich.

I think I heard it quoted that paying more than a third of your income on keeping a roof over your head is housing poverty?

Quite right.

Income is largely meaningless unless assets are considered.

To determine whether someone is "rich" you need to look at their assets versus their liabilities, in much the same way as companies are valued.

Somebody on £50k with a huge mortgage versus somebody earning the same, but mortgage free, rattling around in a large property that's quadroupled in value since they bought it are at two totally different ends of the spectrum despite earning the same.

Income is only one factor, albeit a high income may be used build wealth until the earner can be said to be "rich".