Salaries in London: real life examples

I wrote a post some months ago about how London now requires £500k of income a year – at least according to some high-achieving friends of mine, based on the privileged way they live their lives.  They are one per centers who deserve their success but they do identify with ‘the squeezed middle’. But given the interest in that post I thought it worth discussing exactly what sorts of careers earn how much in London right now.

Obviously I don’t have full knowledge of every Londoner’s personal finances.  I do however help hire (and occasionally fire) people in London’s private sector on a frequent basis, and have experience of this in large companies and small.  This gives me some useful data points. I’m sure there are myriad exceptions to my general rules, but here goes anyway. I would summarise London’s current pay strata as follows:

  • £15k – the bare minimum (legally too, roughly speaking).  Who earns this?  Blue collar, semi-skilled jobs – like couriers – where they are doing (only) one job – or apprentice / trainee / runners in sectors which everybody wants to work in – like TV production. How do they live?  In shared, rented accommodation, in zones 4+; with very few commitments, and the state helping (the older ones) with child care and/or housing benefit.
  • £20k – the white collar minimum.  Who earns this?  Arts/humanities (recent) graduates, customer service reps, retail workers, junior key workers.  How do they live?  With their family, or sharing as couples/flatshares; few commitments (except for student loans – which bite a lot), probably at a lifestage where the state isn’t involved much.
  • £30k – experienced white collar. This is roughly the UK full-time average wage.  Who earns this?  Supervisors, junior managers, and more technical graduates in non-blue chip jobs, experienced PAs, many key workers. How do they live? Typically sharing with a working partner; kids are on the agenda and housing/travel costs are a particularly sore topic.  No staff.
  • £40k – core white collar.  Who earns this?  Recent graduates at blue chip firms, programmers, freelancers, skilled/experienced blue collar (taxi drivers, plumbers). How do they live?     Either sharing with a working partner – in which case life can be pretty good – or as the main breadwinner in the house – in which case life is manageable, but luxuries are rare – but a domestic cleaner would be common. This is the earnings level where London starts to be affordable and fun, or where you can start meaningfully ‘saving for a deposit’ (but not both!).
  • £50k – sought-after talent, proper responsibility.  Who earns this?  Skilled people with ‘a reputation’ (i.e. a CV or a portfolio, or who work for a top tier firm).  Back office bankers, professionals after passing some (but not all) exams/training, experienced web developers, marketing managers, managers of 10-person organisations (e.g. chunky retail shops). Some quite senior people.  How do they live?  In many different ways.  Often with kids, who are at state school. Perhaps some childcare help. Owning a house is quite common for these folks – usually bought 5+ years ago – and becoming a first-time-buyer is possible, with luck and favourable circumstances.
  • £60k – management/professionals.  Who earns this?  Middle managers in large corporates, some qualified professionals, senior programmers, company directors of small businesses.  How do they live?  Similar to the £50k brigade, with nicer holidays. This is a rare salary for people in their 20s; quite common for people in their 40s.
  • £80k – opinion formers, and the lower rungs of ‘the global elite’. The globalising elite, with an Oxbridge degree or multiple languages or both, an MBA or PhD, are becoming more common here.  These guys are approaching the foothills of the UK’s one per cent club. MPs are at about this level (pre duckhouses and other expenses).  How do they live?   Pretty comfortably, in a reasonable flat (or a house bought 10+ years ago) in zones 2-3.  If there are two such people in the home, expect a lot of stress, difficulties with work/life balance, but plenty of disposable income to throw at the problem.    But at this level schooling is in state schools, and everybody works with lots of colleagues who earn at least double what they themselves earn.
  • £100k – people dealing with money (e.g. fees).  What do I mean by this?  Upper management, senior professionals, back office financial services.  These are C-level people in small businesses, professionals (but not partners) in established firms, or relatively junior / clerical people in banks/asset management. Bonuses will be common in compensation here and create 20-50% upside on an annual basis, which is where house deposits come from, and second homes are paid out of. Private schooling is pretty unaffordable.
  • £150k – successful decision-makers.  This is the level I would describe ‘highly paid’. It’s about the Prime Minister’s pay, above which public sector jobs need special approval, and is the treshold where you become a UK one per center.  This is either a good year (with high bonus) for the non-bankers, or a no-bonus year for a regular banker. Plus very senior people in top quartile firms. It is also a very common level of basic pay even for very highly paid (£1m+) banker types – pay above this level is usually in the form of bonus, funky allowances, etc. How do they live?  In a nice, central flat, or in a decent house somewhere in zone 2 or 3.  Or maybe in the ‘bridge and tunnel’ commuter towns. Childcare, nannies, cleaners, interior designers are all common now. Private schooling becomes viable, with compromises.
  • £200k – professional, experienced management. Who? Junior partners at professional firms, quite a few bankers, a few creative types, very few business managers – and those will often be in large, multinational firms.  We are firmly in the top one percent at this level. How do they live?  In nice flats in reasonably central old money areas like Maida Vale, or in houses in suburban London e.g. Ealing or Putney, or in the stockbroker belt. Childcare would be extensive; holidays might involve business class flights; dinner parties discuss air miles.
  • £500k – the top 30,000.  Who? CEOs of mid-sized companies, established front office bankers, reasonably successful traders, established partners in professional services.  It’s worth noting that many of these people will have a basic of closer to £200k, with the rest being profit share, bonus, or similar.   How do they live?  See my original blog post for more detail.
  • £1m – the pay elite.  Who? The ~18,000 people at the summit of their (private sector) field.  The top few hundred CEOs, a few senior C-level types at very large businesses, serious media stars,  senior partners at professional services (or junior ones at Goldman Sachs), regular private equity partners, entrepreneurs owning properly profitable businesses. Equity, or profit share (a.k.a. bankers’ bonus), is almost always involved here. How do they live?  In houses in zone 1 (or its near equivalents such as Hampstead, Highgate, Richmond or Barnes), or in mansions outside the M25; in multiple homes (and airport lounges). Kids are at expensive nurseries/schools from age 3 upwards. With serious staff – maybe daily housecleaning or a housekeeper, nannies flown on holiday, cooks hired for the Tuscan rental villa.

What lessons can we draw here?  A few strike me:

  • Financial services is, er, where the money is. Pay levels here significantly exceed almost all other sectors when you benchmark for responsibility, experience, lifestyle, etc.  The point is that these jobs are not easy to get and are not everybody’s cup of tea.
  • Being your own boss gets you well above natural average payscales, in almost any line of work. It certainly gets you £40k+.  It is however quite tricky to get £100k+ unless you really have ‘a franchise’ – a client base, a rare and valuable skill, some intellectual property, or so on.
  • STEM jobs pay more.  If you’re looking for somebody else to give you a job, it will generally pay more if it involves Science, Technology, Engineering, or Mathematics.
  • Big pay comes with big risk.  Very few people, to my knowledge, have a big fat payment of more than £15k into their bank account every month via PAYE (the UK’s employment system). If you are  earning more than £200k then a big portion usually comes in quite a lumpy and/or unpredictable way – via an annual bonus, clients’ invoices, your company’s dividend, royalty cheques, carried interest or negotiated fees.
  • Tango, and London, require two people.  Both earning. Single earner households have it a lot tougher – and some lines of work just won’t support it.
  • It is definitely possible to live in London on less than £30k – but an awful lot of what makes London easier/more enjoyable/less time wasting/less stressful will be beyond your  means.  To enjoy London, I would say you need £70k+ household income – and realistic aspirations about housing, motoring, and education.

Any comments are very welcome.

25 thoughts on “Salaries in London: real life examples”

  1. I live in London and in terms of pay scale am in the “sought-after talent” pool (ha ha, never been described as such by my employer to my knowledge – they disguise it well). However what tips me into this pool is the fact that I have assets that pay a segment of my income (so I’m technically core white collar, though still very close to £50k per annum). I reckon I could at this point live very happily in London on £15k a year and I could still manage to go to the opera, eat out sometimes and do the other things I like to do. However, in my favour as far as that goes are the following: 1) my house is paid off and in good shape; 2) I don’t have any dependents; 3) I’m a pretty boring person really, happy just to hang round the house reading and leading a quiet life, no expensive hobbies (going to the opera can be very cheap if you know what seats to look for); 4) I’m not fussed if I don’t travel much – am happy with the occasional trip. A lot of good things in London are free (the parks, the woodlands, its history, some of its cultural offerings, such as some of the big art galleries). Others are not that expensive (museums, cinema). So, even in London I think it is still possible to live very cheaply. But perhaps you have to be a boring introvert 🙂

    Liked by 2 people

    1. Hi Cathy
      You don’t sound boring to me. You sound like someone who’s happy doing their own thing and not following and trying to keep up with the rest of the ‘London sheep’ and thinking that you can only enjoy yourself by spending money! 🙂

      Liked by 3 people

  2. Fascinating read, and quite sobering to see where you fit in compared to many others! Once we get rid of the mortgage then we will have a very comfy life (to be fair its not uncomfy now I guess, just not as comfortable as I would like!) – but thats the same for everyone.

    Liked by 1 person

  3. Thanks for this post – interesting to see how the ‘other half live! I can’t even fathom someone earning £500k a year, especially since I haven’t earned that in the whole of my 20 year career! but then, I don’t live in London. Reading your descriptions, I’d likely be under the ‘sought after’ category.

    It’s all lifestyle inflation though, isn’t it and doing what ‘everyone else is doing’?

    Just because you can afford a cleaner doesn’t mean you can no longer put on a pair of marigolds and do a bit of dusting and vacuuming!

    Liked by 1 person

  4. Seems like a good advert to leave London , if you ask me! The rise of the bonus culture, highlighted in the London banks, has been a massive issue. It’s driven a lot of bitterness and unhappiness through all levels of society. Now CEO’s on a million a year think they’re underpaid versus some fund manager (as recently reported) who trousered £17m. In a year. They’re all focused on the guy with the bigger house, none of them looking down to the employees on 17k a year. Totally sad situation, being unaddressed and getting worse.


  5. Hamster wheels.

    Smaller wheels have bigger wheels
    Bearing down to guide them
    And larger wheels have larger yet
    And so ad infinitum.

    Liked by 2 people

  6. I find that in London it is possible to live a good life in zone 2 on approx. £1800 a month after tax. Before this amount you cannot save if you want to eat out occasionally, have a gym membership and live in a decent area.

    Over and above this you can really start saving.

    I am 30 – My salary is £55k plus if I receive a potential £30k bonus then that will be £85k total net income after taxes. Of this I will save £30k – so over half my net salary. My wife also has a reasonable income but much less than mine and cannot save more than a few hundred a month at the moment.

    However, in the area where we live right now the price of 1 bedroom flats has gone from £400k to £620k in the space of 4 years.

    Even though we can save quite a lot of money it will take around 3-5 years of saving this amount year on year to be able to afford to buy a property, and even at this level of saving it is becoming more and more difficult as if prices continue to rise as they have then even on this income it will not be possible as if a property is worth £620k today then even a 5% rise in property will take that to £651k and therefore has wiped out that additional £30k I may have saved the previous year.

    This is why to me London property cannot be sustainable – it is only open to people with parents who can give £100k to help the situation or already owning properties which they can downsize.

    It makes me feel that life in London is totally futile – if I could get the equivalent of £50k in New Zealand or even Spain I know what a great life I could live, whereas in London I feel like I could not afford to have kids with the costs as they area.

    Many people will say that you need to move outside London and commute in, but even then, the property prices have risen so much outside of London it often doesn’t seem worth it and also I know that I would prefer to keep renting in zone 2 for now than to have the hassle of an extra 45 minute commute in packed trains each day.


  7. Fascinating to see this – I had expected pay to be higher across the board. It seems not much has changed since when I left London in 1988 – ejected from the city where I grew up by not being able to even think of buying a house as a single man. However, if I scale my starting salary at the BBC using the Bank of England’s inflation calculator to current values, I did better than one would expect from your scale, implying that middle-level technical jobs pay less in real terms in London today that they did 25 years ago.

    Liked by 1 person

  8. Very accurate.

    These levels are all recognisable to me from experience and observation.

    BTW I work in a bank at the ‘ relatively junior / clerical people in banks/asset management. ‘ level.

    Liked by 1 person

  9. The key I think for me is this. At a certain point the additional pleasure of buying a better house or a better car rises by a very modest margin compared to the work/risk of obtaining or using the capital to obtain it. If you still press ahead then it is motivated by greed or insecurity and will unfortunately deprive you of freedom and happiness. You will get sucked into a vortex where whatever you have will never be enough.

    If you come from a background where these luxuries were not there, remembering what it was like and appreciating what you have got already can be a very powerful tool to stop you getting caught up that vortex

    Warren Buffet made a very powerful observation. If everybody in the worlds life was in a capsule and all those capsules were randomly placed in a skip, would you take your life in its capsule and go over to that skip and swap it randomly for anyone else capsule . I doubt it very much

    Liked by 1 person

  10. […] Whether this is the result of structural changes to the economy, or perhaps the massed ranks of index investors beginning to kill the golden goose is something I am not clever enough to say. Perhaps it’s as simple as the increased financialisation of the economy, in the end somebody has to be paying for all those salaries in London. FirevLondon put it well […]

    Liked by 1 person

  11. I’m not sure if it comes into one of your brackets but in the 80k to 100k I’d put ‘sales professionals ‘ of alot of professions.

    Sales is a great area to earn outsize if you’re good at it. Risky as it’s often commission based but you keep what you kill generally

    Liked by 1 person

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