Minimum salary required in London: £500k?

I have not one, not two, but at least three good friends (couples) who would broadly agree with the statement that you (/one / they) need £500k of salary to live in London.  Can this be right?  You need at least 20x the official statistical median wage – really?

First a couple of caveats.  The friends I’m thinking of are all ‘fully fledged families’ – dual income mum+dad, with 2-4 kids.  By dint of being dual income, they need paid-for childcare.  They all live in premium parts of London – all in zone 1. They are not blind to the very affluent and privileged lives that they live, but nor are they totally removed from the real world; they aren’t oligarchs.   They also aren’t wildly excessive compared to a bunch of other friends; I know a lot of Londoners who would be a similar camp to these guys.

Secondly these friends all live very comfortable lives.  Regular ski trips, Michelin-starred restaurants, frequent use of taxis, babysitters used at least once a week – these are all a given.  But they all have budgets, manage their finances pretty carefully, and bitch about the cost of living.

What strikes me is that £500k is at such a complete disconnect to the Frugal Living benchmarks set by so many of the personal finance community. Reading the blogs, the yardstick for annual expenses appears to be:

  • Bare minimum: about $12k a year (living nowhere near a city like London); example here ;
  • Enjoyable UK life: £15k-£20k per year. Examples of which are here, here.
  • 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.

These figures are so far below £500k per year I thought it worth exploring how this discrepancy arises. £500k vs £30k? How come?  Yes, “rampant consumerism” is a factor.  Yes, school fees are a factor – and arguably are a luxury option.  Yes, a lot of what Ermine rants about is going on in my friends’ lives.  But without passing judgement myself, let me explain a bit more context about all these £500k friends.  They all:

  • Live in houses worth £4m+.  Which is what decent houses in Zone 1 cost these days.
  • Use private schools.  These are a killer for budgets, as we’ll explore below.
  • Start private schools very early.  Age 5 if not before. In my day it was reasonably common even for Etonians to have been in state schools until the age of 13; these days my friends using independent schools all start much earlier.
  • Are high-earning professionals/senior people.  Of the six people in these three families, there are four people working at least 50 hour weeks.

So, what is a £500k-salary-per-year cost structure?

  • £225k Income taxes (inc social charges).  These friends all receive all their effective income from paid employment; this is tax-inefficient and means average tax rates of close to 45%.
  • £35k Childcare.  I’m not exactly sure what my friends pay here but based on Mumsnet, plus regular babysitters at £50-£100/night, I am going to estimate £35k of gross cost. Of course a significant amount of this is a ‘cost of income’ because it is triggered by the parents choosing both to work full-time.
  • £50k Mortgage.  This number is somewhat hypothetical, based on having about £1m mortgage taken out relatively recently. Possibly there is a small repayment component to this hypothetical figure, but not material for this argument.
  • £50k School fees.  This is a big round number, based on 2.5 kids at £20k per year (including uniform and a small allowance towards school trips / kit / etc). Having all kids start at private schools early means almost all of my friends’ kids are incurring school/nursery fees.
  • £20k Holidays.  This is a rather round number, and may be a bit too high, but I’m working off £5k per family holiday, four such holidays a year. In practice there are probably two actual family holidays, and a variety of smaller trips – including maybe parents’ weekend away. All my friends ski, which would bump up the average.
  • £15k Groceries.  Round number; this works out as £300 per week.  I am probably undercooking this one. Let’s say it includes a bit of wine.
  • £10k Dining out. This is a pure guess.  But on the basis that I know the sorts of places my friends eat at; that such places cost me about £120 for two; and adding a fair bit of taking kids out too, I think £10k per year sounds about right.  Book clubs, parties etc all contribute to this cost.
  • £16k Shopping.  This is a completely random number and almost certainly undercooks it.  But it doesn’t take a lot of Kensington & Chelsea clothes shopping, Apple gadgets, garden furniture, etc for a modern London family to hit £16k per year. I confess that £16k helps my addition for this particular exercise.
  • £10k Motoring.  Between the three families I’m thinking of, they own 5 cars of average value £30k.  Assuming £4k depreciation per car per year, plus insurance, servicing etc, £10k per family per year feels about right. Only one of these cars is regularly driven more than 10k miles per year.
  • £10k Household. This is a made up number, based roughly on what my house costs to run.  This includes utilities, council/property tax, minor repairs (not DIY, naturally), a spot of window cleaning, etc.
  • £4k Commuting costs. I’m working here of £1500 per year for zone 1 travel card per adult, plus a bit.
  • £55k Wildcard.  Savings?  New car? New kitchen?  Take your pick.  No 30% savings ratio here though, obviously. A couple of my friends save a reasonable amount into their pension/ISAs but one doesn’t.

American readers might note the lack of healthcare as a significant expense here in the UK with its amazing NHS.  But they must wince, as the rest of us do, at the school fees point from such a young age.

As a final point, there is a clear answer to my headline question: No, the minimum salary required in London is not £500k.  For starters, working costs money and tax.  For any of these guys to stop working, they won’t need £500k to sustain their lifestyle.  If they started drawing down savings, they could make do with about £250k of income from tax-efficient assets.  If they gave up school fees, or if they – shock horror – left London – then their costs drop dramatically. But the basis for my blog is that financial independence that needs a major uprooting of your life or constrains your life choices is not truly financial independence. So I think for these friends of mine the minimum income required is at least £200k.  Still a very sizeable number.

Two questions from this:

1) Londoners: what have I omitted? My list isn’t comprehensive.

2) Frugalists: With such a cost structure, where would you start saving first?

37 thoughts on “Minimum salary required in London: £500k?”

  1. Hi FvL

    Thanks for the link and yes, it is an enjoyable life that I am leading on that kind of budget!

    Those numbers you’ve quoted are mind-boggling to me but are evidently normal for your friends and the circles they mix in.

    Where to start saving first? Hard to really say but they could probably make reductions on the groceries, dining out, holidays, shopping and motoring. All the other stuff is probably a bit more necessary’ for maintaining the lifestyle they live, eg childcare will be whatever the going rate is but groceries don’t have to be so expensive.

    The £55k wildcard could be used max out their ISA and pension perhaps, although won’t these people just easily go over the £1m lifetime limit for pensions and be taxed over and above this figure? They could also max out their children’s ISA for more tax savings or use the money to make overpayments to their mortgage.

    What keeps popping into my mind is that they need to move out of London to really cut costs but as you say, that’s not an option.

    What would you save on if in their shoes?

    Liked by 1 person

    1. Weenie – very interesting, thank you!
      I don’t know about their savings but I don’t believe any of these friends have reached the £1m lifetime limit for pensions. At least one of them is trying to max out his + wife’s ISAs, and I am sure there are savings for the kids in some way or other.
      One of the common dynamics of course for high earning types is getting a lot of money via an annual bonus. This money is often then used for e.g. mortgage overpayment.

      What would I save on? Hard to say for sure. Holiday spending is one area – you can have good holidays for less than £5k! I also probably react to them living in zone 1 the way you react to them living in London – do they really need to do that – but as I say I am trying to look at this all from the basis of ‘you shouldn’t need to move out of your area’. For me the big one is school fees – where £20k+ per kid from age 4 feels like an astronomical luxury – but I am not somebody to tell any friend of mine they invest too much in their kids.

      Liked by 1 person

      1. I didn’t mention the school fees for the reason you cited but they are astronomical. When I went to uni, I was somewhat amused to find myself, having been educated in a bog-standard state school, rubbing shoulders with privately educated individuals. That’s what I loved about uni, it gave me the opportunity to meet and get to know people with whom I would never have normally mixed with – some of whom are still very dear friends to me!


  2. I haven’t yet worked out whether your subjects’ required salary is £500k each or between them 😉 The UK median wage is £21k which pushes me in the direction of each.

    One of the first things to do is to take the helicopter view of a human life-cycle. the years ‘twixt starting kids and having them off your hands are particularly expensive in a industrial consumer society because they are a massive cost centre and with the demise of the SAHM since the 1970s also an opportunity cost against a profit centre. It would be unwise to ignore this – the people who need £500k to live in London with children don’t necessarily need that much when FI, presuming they don’t pay school fees then, and could possibly downsize.- a flat in the Barbican could work well for a retiree particularly if they were single.

    They also need to pay good money for tax advice. They need to use VCTs and EIS and all that sort of jazz, because the 4% SWR on 2x £1m SIPP LTA at about £80k is just not enough to live that sort of lifestyle in London even as a retiree. To be honest, at that stage I’d move out a bit and be prepared to pay decent money on commuting and taxis and the odd stay in a really fine London hotel – for the evenings, because where London really excels is all the great stuff you can do after the working day! Using trains and suchlike to commute to London for work is really horrible, but doing it against the flow and off peak in the evening First Class is pretty cool IMO. Plus by the time they retire we will have self-driving cars so it’s not like they’ll be stuck at the station if they have a drink.

    Too many people look at FI as doing what they are already doing, but without work. Your responsibilities, preferences and aims change over the lifecycle. The aim of FI is to have a damn good life.

    > there are four people working at least 50 hour weeks.

    That’s rough. Doesn’t matter if you’re sleeping under Charing Cross railway bridge or Bill Gates, your life is getting shorter exactly 24hours every day. There’s a case to be made for the young and single to do a stint somewhere horrible and long hours for a few years to make their fortune. But post-30 and when you have young kids? Each to their own, I guess 🙂

    Liked by 1 person

    1. Thanks Ermine.
      To clarify – we are talking £500k per family. This works out as e.g. £350k for one and £150k for the other, including bonuses.
      I didn’t realise the median was as low as £21k. Any idea what it is for full-time workers?
      You are absolutely right that post kids the cost structure looks different. I don’t yet know what that means for friends like these.


  3. Hi FvL

    As a Londoner also I really think that your 3 friends really need to leave their Michelin starred restaurants and have a look at what’s going on in the real world. A salary of £150k puts you in the top 1% in this great country. What’s £500k? The top 1%?

    A decent house in zone 1 for £4M is pure privileged class – maybe it’s time they moved to Zone 2. £20k for holidays – your friends have just spent the average post tax salary of the UK on holidays. £15k on groceries – so they need to spend 3/4 of the average post tax salary on food. I’ll stop now before I start ranting…

    You can live like a king in London on an order of magnitude less than that and I’m living well on a lot less than even that. It just takes a bit of creative thinking rather than continual wallet opening. If you step away from the I want/I’m worth it mentality life really does become very different. I consumed like the best of them and I must say stopping was the best decision I’ve ever made. All I hope is that those £500k jobs aren’t offshore-able and that their health holds up in what I’m sure must be very stressful positions. I really do hope they are saving a significant portion in there somewhere as the State Pension and a bedsit in Zone 4 is going to be real come down. Unless of course the inheritance appears in time…


    Liked by 3 people

    1. RIT – thanks for the comment!
      I certainly am not saying you *need* to spend like this. But in the worlds these guys are in most of this is normal. The school gates factor is very real here; what is normal/expected just gets ratcheted up, and everybody knows somebody who obviously makes/spends 2x what they make/spend and leaves them feeling poor. The stories about the arguments about what to spend on gifts for the school teacher make my eyes water.
      On a more positive note, these friends would all say that if you can afford it (which they think they can) where they live is an excellent place to bring up kids; the schools are excellent, childcare/help is readily available, the stimulation/etc for kids if awesome, etc. So moving into Zone 4 / etc would be seen as a significant compromise by all of them.
      I may have slightly overcooked groceries / holidays, but I’ve also omitted a few of the lesser categories, so I don’t think I’m directionally off.
      All the best


      1. “the stimulation/etc for kids is awesome” – what does living in zone 1 offer for the kids in terms of stimulation beyond living further out? (hoping it’s more that the museums which are massively over-hyped sources of stimulation)


      2. @MRP: In fairness you are right that a lot of the stimulation/etc that I was thinking of is readily available to families outside zone 1 too. The argument I’m relaying is regarding bringing kids up in London versus bringing kids up in e.g. the home counties/Cotswolds/elsewhere.


  4. 1/ I suspect your £20k for holidays is way low for family of 4 living this kind of lifestyle.. Would expect skiing to be minimum £6k more likely £8-10k alone!

    2/ Presumably they all bought their first homes at least some time ago as obviously families on ‘only’ £500k a year now aren’t going to be buying a £4m+ home. Depressing isn’t it!


  5. Interesting analysis of the Wonderland that is Zone 1 London living for financial sector workers. 😉

    Perhaps the biggest piece you’re missing is it implies they’ve £3million in housing equity?

    So the headline could have been: “Do you need £3 million to live in London?”

    To which the answer would still have been “no” but it would also be an interestingly provocative question.

    That housing equity is also £3 million they could invest instead if they moved and rented, which might be worth £125,000+ a year if invested in UK equity income trusts, say.

    Be interesting to see what the equivalent £4m house would cost in rent…

    (Caveat: As you know if I recall correctly, those sorts of comparisons have cost me dearly over the years here. 🙂 )

    Of course from a behavioural finance point of view you should get new friends, unless you’re in a £5m house and earning £750,000… 😉

    Liked by 2 people

    1. @Monevator

      Maybe I should add to this blog’s outlook that true financial independence shouldn’t require one to move house *or get new friends* ! Which I suppose means one needs to be immune to behavioural finance/human frailty completely…. ho hum.

      At the risk of sounding like a completely elitist so-and-so, I think the concept of needing £3m to live in London sounds far less extreme – than the concept of needing £500k annual earnings. There are a lot of ‘middle class’ (in the Torygraph sense) bank of Mum and Dad types who have a net worth of £3m despite having earnings of a lot less than £500k.

      But yes you are absolutely right that all of these guys have a few million quid housing equity. They have all been pretty savvy at buying property, and have traded up in classic Poor Dad style whenever possible (and before stamp duty reached the >10% level it has hit now). Prime London property has done so well for them that I suspect it has somewhat reinforced their determination to stay put in the prime zone 1 neighbourhoods they live in.

      As it happens the very concept of ‘needing £500k earnings a year’ came up when I made a very tentative suggestion that one of these friends could retire already; his argument was that this wasn’t possible at all because with say £4m of housing equity, he’d be able to get nothing like £500k of earnings. While I disagree with his premise, it is certainly true that the dividend income alone from £4m invested capital (call it £150k pre tax; call this £90k post tax) would represent such a wrench to him that it doesn’t feel viable to him.

      For reference I do know what these houses my friends like cost to rent: about £10k per month, roughly speaking. They are at a much lower rental yield than 10% stamp duty.


      1. Yes, I was being a bit tongue in cheek. 🙂

        I think your blog offers a really interesting perspective, and I plan on following it with interest.

        Indeed, including you in my links today!

        However you correctly anticipate again and again what the chief complaint will be, which is that you’re repeatedly asking: “Why do people on average earnings say then need a bit less than average earnings to retire, when my multimillionaire friends say they need millions to keep living like they do…?”

        Well… yes. 😉

        Of course, it could well work wonders for you in terms of having a big readership, if only from sheer voyeurism! 🙂 People love those Kardashians, after all. 😉

        Liked by 4 people

  6. Nice article. I used to live in London and moved back to Australia post having kids. Plenty of friends in the similar boat to this article. For reference the numbers I use in Australia (converted into GBP at 2:1 for ease), from largest down.
    Note I ignore tax not because it doesn’t hit, but as one optimises the tax position with global investments it is an overall effective rate.

    Children = 50k gbp (2 kids only, private school plus clothes, babysitter but no nanny)
    Travel = 35k gbp (2 large trips, 1 small trip)
    shopping = 25k (groceries plus wardrobe top-ups)
    entertainment = 15k (dinners/shows/gym)
    holiday home = 10k (running costs no mortgage)
    cars = 10k (2)
    utilities = 10k
    health insurance = 6k

    it’s about 150k gbp post-tax with no savings, no mortgages on any properties.

    I run my calculations on a 4.5% investment yield
    The way I figure each child costs you 40k in running costs (education+food) which at 4.5% is 900k gbp. Add on the house size you need (extra 500square feet per kid at 2k psf) = 1m

    So roughly each child is about 2m post-tax.

    My numbers were pretty similar in the UK. The only difference in Australia is you get a larger house for your money.

    If you haven’t found it yet, I suggest checking out seekingalpha. plenty of good articles on dividends and investing on that site. I particularly suggest searching out an article on 10×10 by David Van Knapp which talks about yield on cost (I don’t agree with the measure, but it’s a good way to think of long term div returns)

    Liked by 1 person

  7. I’m surprised that your friends don’t have a house in France or a holiday home in the West Country. If you didn’t rent it out and just kept it for family and friends, it could swallow tens of thousands of pounds of annual income. ( although you might get it back again as a lump sum when you come to sell the property… Maybe it would prove to be a good investment.. )

    Liked by 1 person

  8. Wow. That is a mind bending amount of money to spooge away each year. Zone 1 is a completely different world, it may as well be the surface of Jupiter.

    I guess it’s different once you are ‘in the mixer’ and all the people you are close to are spending/living similar, but you could make enough money to be FI in a short few years at that rate (and then move somewhere cheaper). Perhaps it would be a lonely few years cooking your own meals and visiting free attractions while every one else is Michelin Starring it or going on skiing holidays 🙂

    A couple of friends moved away from the UK as they thought it ‘impossible’ to live a half decent lifestyle in the UK without earning £100k a year.

    You say that FI shouldn’t require uprooting your current lifestyle to be true independence, but do people actually retire in Zone 1? I can’t imagine that they do, so some sort of upheaval is surely impending at some point? I’d say it’s better to face it on your own terms 🙂

    I can’t even think where to start on saving on costs…

    Great article

    Mr Z

    Liked by 2 people

    1. @MrZ
      Excellent comments. Worth exploring more in future blog posts I hope. In short I would add that I too have friends who have left London and I always have felt that that route is a one way street. They can’t come back. One couple in particular really wanted to come back and when they did the downgrade they endured in location/commute was a warning to the rest of us.


      1. Yeah, it would be hard to return.

        Way back in 2004 after university I decided to avoid London for a variety of reasons, some still valid to me and others pretty stupid/ignorant on reflection. Working in finance, and assuming the FI mindset, a few years in London saving hard and benefiting from property gains then leaving would have been a blinder of a move. Hindsight is 20/20 and all that 🙂

        Mr Z

        Liked by 1 person

  9. To my taste London isn’t inhabitable unless you are in the helicoptering classes. So they just aren’t rich enough to live there, poor souls.

    P.S. If the idle sods work only 50 hours a week, how can they expect to make serious money?


  10. I think you could probably exist in London on £500k, but to actually have a life takes multiples more


  11. I can easily understand someone wanting over £500k to live a great lifestyle in central London, but I think where people get onto shaky ground is when they start to believe they NEED £500k to live a good life.

    I have chronic health problems at a relatively young age and I can tell you there’s nothing like being ill every day (and sometimes needing a wheelchair) to remind you that some things considered once essential might not be quite as important as we thought – when life hits us hard most of us are reminded that family, friends and enjoyable shared experiences are what really matter. I’m also reminded that although my parents were generous enough to send me to a half decent private school, I actually hated it and yearned to go back to the previous state school!

    I don’t agree it is outrageously expensive to live in “London”. Central London yes, but London, no. It’s still quite possible to buy a house in ok parts of the city (on the tube) for not much more than £200k, and a nice little house in a leafy pleasant part is still not much over £400k. That’s not cheap by any stretch, but owning a property like that does not require £500kpa. If the mortgage is paid off, living in London on $20k is not entirely unrealistic for a few.


  12. The numbers are just staggering to most “normal” folk aren’t they. Like someone else commented it’s not like being in the top 1%, more like the top 0.1% with those earnings.

    Personally, I walked away from growing my salary a few years ago & downshifted to enjoy that little thing called life & spending time with my kids. Mrs LCIL & I earned enough to options & debated them all vigorously: kids in full time childcare vs getting an au-pair, then moving on into private schooling…. in the end we decided to to do none of the above & downshifted to spend time with them ourselves.

    Somewhat ironically, we also actually save/invest more £’s now even though we earn a fair bit less each year.

    I’m a firm believer that when i’m on my death bed (hopefully at a ripe old age), I won’t regret spending more time with my friends/ family & less time at the coalface working 50-55hrs/week.

    Liked by 1 person

  13. Wow!!!
    Great post and a very interesting and eye opening read.

    My own personal point of view only of course but I don’t think that staying in your area and maintaining the lifestyle you lead is the only true test of being FI.

    Life is all about opportunity costs and you cannot have everything.

    At some point I would imagine all of these people were not earning this amount of money and were pretty much as happy as they are now? Fair enough they may not have had the kids schooling but I would imagine even taking that out they got by fine without the 4M houses, posh cars and so on. What they have fallen into is exactly the trap that stops any of us, whatever income level, of ever achieving FI, which is simply lifestyle inflation.

    If you carry on that line of thinking then if they “hit FI” i.e. by their/your definition can live in London very nicely by drawing down £250K per year from their nest egg, then they are still not truly FI because there is someone down the road in an 8M mansion with houses all over the world and a private island or two. So now they aspire to that next level up and will just keep on working because the £250K per year is not enough for them to live the exact lifestyle they reallllly wanted all along.

    As you can see there is no end to this cycle and so for me that logic breaks down.

    A much better approach is to really work out what is valuable to you in your life, cut all other expenses aggressively and then see where you end up. If they decide that living in London permanently, private school and so on is important then that’s obviously fine but then they must accept the fact that FI is a long way off (I am guessing they do not even have this as a goal so that’s probably ok though?) but far more importantly for me, stop bitching about the cost of living! 🙂

    Clearly you have asked yourself those questions and came up with the answer that you would like to stay in London which is great as it is a hyper-concious choice, and you still have plenty of budget left over to save as well. 🙂

    Back to the actual question in hand, in terms of your numbers I think you are pretty much spot on if not slightly under as you’ve mentioned. Shopping, holidays, food, cars, learning how to DIY around the house can all save them money but I would have thought that this was obvious to them and they are consciously consuming the higher cost items and outsourcing menial tasks because, hey they can afford it (and FI must not be a goal as previously stated).

    It would be interesting to know, have any of these people ever complained that they think they’ll be working to grave, that they don’t like the long hours, miss their kids, hate their job, or anything along those lines that makes you think they would be receptive to the idea of early retirement through “frugality” and saving a large %age of their income? If all they complain about is the cost of living then I would assume they probably aren’t that bothered about it in the first place.

    Cheers for a thought provoking post and off to read some more of your blog – well actually will do later as need to get on with some work now 🙂

    Liked by 1 person

  14. Well, I live in London. Not Zone 1, but Zone 2. And a terraced house rather than a detached one. We have 2 children. Those similarities aside, I find it almost impossible to recognise the expenditure you describe. And, to be honest, I find it completely antipathetic.

    I work in the arts and my partner works (self-employed) as a consultant to various online enterprises. Our annual joint income has never exceeded about 80K and after our children were born it was a lot less for fairly long periods.

    Nonetheless, we enjoy to a huge extent the benefits of living in London without any of the extravagance or the stressful lifestyle choices that the people you write about seem to think necessary.

    We have access to several nearby parks and playgrounds, we use the great local state schools, we have a network of friends and neighbours for childcare and general support, we can get to see internationally significant buildings, places and institutions for the price of a bus or tube fare. Our children experience much more culture – in the sense of both human diversity and artistic expression – than I did growing up in the suburban North West. I cycle to work at a cost of pennies a day, and we only use our 12 year old car infrequently. There are an ever-growing array of places to buy high quality food locally at reasonable prices – the list goes on.

    The myths about London – and children – necessarily being expensive are just that; myths. Your acquaintances (and I have some who are in similar if not identical situations) are victims of unnecessary lifestyle inflation which I know simply does not bring with it increased happiness.

    There is one huge caveat to my comments, of course, which is the cost of housing. We are lucky enough (although I claim some foresight) to have bought our family house back in 2001, with a modest mortage (although it seemed big enough at the time) – some years before our children arrived. We certainly could not afford to buy our own house now, nor anything equivalent within a 10 mile radius. We overpaid our mortgage, and it had almost gone by the time our first child arrived. We now live effectively rent – and debt – free, and we invest a lot (by normal, if not quite FI standards) of our income.

    I have younger colleagues – and I don’t mean terribly young; I mean people in their late 20s and early 30s – who find it almost impossible to believe that I own an actual house in a reasonably central part of the city. Their (arts-worker) salaries are almost entirely consumed by the cost of renting, and they find it incredibly hard to accumulate savings for a deposit, never mind retirement.

    This, I think, is terribly sad. And I also think it will have a depressing impact over time on the make-up and vibrancy of the city. London will be far, far less appealing when it’s completely taken over by the corporate / consumer drones you describe in your post.

    Liked by 1 person

  15. If I may make a more general comment on your blog rather than a specific reply to this post, I’m very interested to read it as there seems to be a gap in the blogosphere (?) for someone who enjoys the cultural and other advantages of London, or any world class city, but wants to be FI. Of course, we should all buy less crap, but isn’t spending on experiences – live music or theatre for example – sometimes worthwhile or even wonderful?

    Also, I would have thought that many people who work here really enjoy their jobs – many of my older colleagues don’t need the money but choose to keep working. For me, the quality of work in London is a big part of the pleasure of living here. It helps that we are self-employed and so already have a lot of freedom.

    But some other blogs make an assumption that jobs are a prison from which you have to escape, which I think is not true for many. Taken to its logical conclusion, this assumption might suggest that everyone should choose the job that will pay them the most, regardless of whether it’s interesting or enjoyable, and achieve FI by doing that job for the least amount of time – which I think is bollocks.


    1. @Stan – thank you for your comments. I agree with you that for a lot of high earners in particular work is a very positive thing. I am one of those people. I don’t have to work but I do so because I enjoy it. I’d take the observation a bit further though and say that one of the things that I find unsettling is how a lot of high earners save so little, and spend so much; you don’t need to want to stop working to make investing your income to be a sensible (and rewarding) thing to do.

      I do share @Chris’s observations that the younger generation faces a very different challenge, thanks to housing costs, and this poses some difficult questions for London’s character in the future.


      1. I think that it’s also true for a lot of lower earners – for example I know teachers and academic scientists who enjoy their jobs to the point of obsession. I agree about the need to save – it should be obvious – but have some sympathy for your friends…

        I also agree about the cost of housing, which is a very big problem for London and will lead to some hard choices for Londoners. I don’t think there is an easy solution – unless it is just an enormous bubble that will pop one day.


  16. Lets take a model of a high net worth family

    1) House worth say £2.5million Mortgage £1.5 million. House in good order
    2) Say a luxury car BMW 520 Touring Audi Q5/7 Volvo XC90 etc
    3) £10,000 per month for food holidays, clothes domestic help etc
    4) Saving retirement funding (allowing for inheritance) say £50,000 per annum if no inheritance then probably a great deal more
    5) School fees £35,000 (two children)


    Assuming a mortgage of £1.5 million on 3.5% over 30 years = £80,000 per annum
    Running costs of home excluding repairs and renewals of furnishings say £20,000 per annum
    Repairs and renewals £45,000 per annum (a roof on a substantial Victorian house in London SW could be £75k) decoration could be £20k. Rooms will need to be re-carpted, new curtains etc etc. At this figure there will be some DIY required

    Housing costs £145k


    A car costing £40K will cost around £12k per annum if leased including petrol maintenance and insurance

    Living Costs

    £10,000 per month – £120,000 pa

    Saving retirement

    £50,000 a year

    School fees


    Total would be £362,000 per annum. So a gross income of £500k if both works and earn around £250k each or if one works then nearer £600k

    Liked by 1 person

  17. And well, you are talking about British people who have bought properties when it was cheap. You are talking about people in their 40s or 50s who could bought property 10-15 years ago.

    We come from the US, we are in our early thirties and even with a salary close to 400k pounds per year – we can virtually buy nothing – maybe a small flat in zone 2, so we rent and try to save – but it may take years and years with the high tax here and the high amount of deposit required.

    I think London is a horribly city – and so expensive, we live in NYC and Chicago and had a huge loft/apt for the price of a 2 bed here. But the point is, your friends are still lucky because they bought their properties a long time ago.

    It’s much harder for younger people and foreigner, our lifestyle on 400k salary has nothing to do with that of your friends.

    Liked by 1 person

    1. Of course you struggle, you earn 20% less than the minimum salary required! 😉
      Jokes aside, I’m surprised to hear that you find London more expensive than NYC. I would say they are on par, if anything London is (marginally) cheaper.
      Regarding property, using the standard UK “affordability” test, you can buy a property of up to £2m, with a deposit of as little as £100k (that’s 5% deposit, and 5x salary multiple for what you can borrow on a mortgage). With that amount I’m sure you can buy way more than “a small flat in zone 2”. You can have a large flat in zone 2 for half that in fact.
      I’m not advocating doing that (leveraging 20 times your deposit and maxing out your borrowing capacity), by no means, I’m just pointing out what others are doing, hence I referred to the standard UK “affordability” test, with an emphasis on the quotation marks. I think that’s nuts. At your income level though you have many options: you can buy something well within your reach (say a £1m flat), or you can keep renting and invest elsewhere, something that most likely will deliver better results over the long run. Either way I find it hard to believe that the city is unaffordable on £400k household income, and especially when you compare it to NYC, which I consider to be a bit more expensive overall (but still very much affordable and enjoyable on $600k salary)

      Liked by 1 person

  18. You’re post made me chuckle! London exists beyond zone 1! I agree with Chris. I live in London quite comfortably without remotely close to earning 500k. We are a family of 4, own a semi-detached house yet I do not relate to your friends at all. Seriously, we live in one of the most amazing capital cities in the World, there is a vast range of activities and restaurants catering for a range of budgets and tastes, you can enjoy yourself easily without breaking the bank. I love central London and go most weeks but a £120 meal for two, do they only eat at The Ivy? In short, you don’t need 500k to live in London, but with housing on a never-ending upward trajectory who knows how long that will be the case.


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