According to new data from NatWest, many UK earners don’t realise how well off they are. Some 27% of those earning £100,000 or more annually would describe themselves as “not very” or “not at all” wealthy. Find out how rich you are, and how to get started with managing your money.
If you’re earning a lot of money, but it doesn’t really feel that way, you may have “affluent imposter syndrome”. This is where earners in the top 2% income bracket still say they don’t feel “well off”.
The perception of how much you need to earn to be considered wealthy tends to change depending on how much you currently earn, according to NatWest. This is might be due to the feeling of “not keeping up” and, as your wage increases, so does the urge to reach the next income bracket or financial goal.
Those who earned up to £26,000 a year thought a salary of £50,000-£75,000 was a marker of wealth. Between £26,001 and £59,199 and the benchmark goes up to £75,000-£100,000. Here, we help you work out how wealthy you really are and share ways to make your money work harder if you’re feeling the pinch.
In this article, we cover:
- How rich am I?
- What is “lifestyle creep”?
- Should I speak to an expert about my finances?
- How can I boost my pension contributions?
Read more: Four ways to boost your state pension
How rich am I?
If you’re wondering what percentile of earners your wages put you in, consult the table below.
| Percentile of earners | Median annual earnings before tax |
| 10th | £9,024 |
| 25th | £15,840 |
| 50th | £27,324 |
| 75th | £42,300 |
| 90th | £63,936 |
| 95th | £87,228 |
| 99th | £181,224 |
This means if you’re earning £45,000, you’re in the top 25% of earners. If you’re earning £65,000, you’re in the top 10% of earners. Those earning £100,000 or more are in the nation’s top 2% of earners.
What is “lifestyle creep”?
Lifestyle creep occurs when as you earn more money, you spend more money. As people’s wages increase, they review the quality and standard of things they can afford. This leads them to lead a more premium or luxury way of life; their lifestyle “creeps” upwards.
Because of this, when people receive pay rises, they may not actually end up saving more money, as they’re spending more. This can lead people to not feel as wealthy as they really are.
“There’s clearly a disconnect here between perception and reality, when it comes to finances for high earners,” said Laura Newman, head of NatWest’s specialist advice and investment services.
“The reality is, whilst they have higher than average salaries, many of them have equally higher outgoings –- larger mortgages, higher energy bills, increased childcare and private education costs.”
If you’ve had a substantial salary increase in the last couple of years and you’re still feeling the pinch, it’s worth reviewing your outgoings. See what changes you notice – have your habits become more “premium”? Cutting back on some of them can give your savings a boost.
Over half of high earners have never spoken to their bank about financial goals, says NatWest
If you’re in one of the top earnings percentiles but you’re still finding that you’re not saving enough money or you think you may be struggling financially, it could be worth consulting your bank, or seeking independent financial advice to ensure you’re making the most of your money.
“Lifestyle creep, compounded by highest-in-a-generation interest rates and inflation, means many are now facing financial pressures never previously experienced in their adult lives, making them uncertain as to how to manage their money in this changing environment,” said Newman.
“It’s more important than ever to improve financial resilience and to seek out the right advice to ensure your money is working as hard as possible for you.”
NatWest provides a service called NatWest Premier, which helps its higher-earning customers get the most from their money. Most high-street banks offer their own version of this; get in touch with yours to find out what help is on offer.
One financial advice firm, Kellands, is offering all of our readers a free hour-long session with one of its independent financial advisers. They can get a good idea of your financial goals, and help you take the first step to achieving them.
Sign up for a free session with one of Kellands’ advisorsusing our link*.
Should I boost my pension contributions?
The more you earn, the more tax you pay on those earnings. One way to make sure more of what you earn goes into your pocket – rather than the taxman’s – is to take advantage of salary sacrifice.
This is where you agree with your employer to lower your salary, and they pay the difference into your pension instead. Crucially, this amount isn’t taxed. So while your immediate take-home pay packet decreases, you’ll benefit in the long run and pay less tax overall.
It’s worth noting that not all employers offer salary sacrifice. Find out more about how to boost your pension.
Plus, we’ve got ten easy ways to cut your tax bill.
Read more: How much does financial advice cost – and is it worth it?
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