Have you ever wondered what salary would be enough to live comfortably in London? Even though I live in Manchester, I’ll write about our capital, as millions of people live there, and also, many people from all around the UK and the world might be thinking of moving to London to work or study.
In this article we’ve calculated 3 different salaries, and we’ll try to figure out whether you’ll have enough money to live in the capital as we’ll start deducting your expenses. We’ve used this online salary tax calculator to find out the exact net pay after taxes and NI is deducted. Then we’ve added your rent, car costs, food costs, leisure, and other basic costs to your monthly expenses, and we’ve calculated how you can live on that wage. Now let’s get started.
Assumptions: This article is part of “trilogy” - we’ll post 2 other articles with the same title, but assuming different personal circumstances. With this instance, we’ll assume that you are not married, you don’t have kids, and you are renting a room in a shared accomodation, or a studio flat when you earn £80k a year. This situation applies to most students, or professionals who are just getting started in life and/or in London, but it can apply to other people as well.
£20,000 annual salary
Poor neighborhood in London (that’s what you’ll afford with a £20K salary)
There is no point in going lower than £20,000 annual salary in London. Sorry to be brutal with some people, but if you are living in London and you are earning under £20K a year, then you’ll need to level up, skill up, and work on yourself to become more valuable to the marketplace. London is a place that pays big time to be great, a place that pays to be a hard working person. So if are earning less than £20K a year, you’ll have to work on yourself first.
Now let’s see how you’ll manage life with £20,000 a year. From our calculations, your monthly net pay after you’ll pay your taxes and NI will be around £1,400.
Here is what you’ll be able to afford with £1,400/month net income, in London:
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- NET INCOME: £1,400
- Rent: £700 (an average room in a shared house)
- Public transport (no car for this wage): £200
- Food: £400
- Mobile phone contract: £30
- £70 leisure
- TOTAL: £1,400
As you can see, with a £20K salary in London (and in most places in the UK to be honest) you’ll be living in a pure “survival” mode, barely making it through each month. That, assuming that you won’t have any unforeseen problems in life - which we all know that you’ll have. We all have. Now let’s see how well you’d live if we double your salary, to £40K a year.
£40,000 annual salary
Now even though we’ve doubled your gross yearly salary, you’ll notice below that your net earnings didn’t quite double. This is because you’ll pay tax on a larger percentage of your income, therefore more money will be deducted from your gross wage. According to the income tax calculator above, your monthly net pay will be around £2,500. Now let’s see what can you afford from this income.
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- NET INCOME: £2,500
- Rent: £850 (a better, double room in a shared house)
- Car leasing: £250 (you can get a Skoda Octavia or BMW 2 series for this price)
- Car fuel: £200
- Mobile phone contract: £50
- Food: £500
- Leisure: £250
- Clothes: £200
- Other spendings: £100
- Saving: £50
- TOTAL: £2,500
As you can see, with a £40K salary, you can have a normal, regular life in London, and you can even save £50 a month. You won’t be able to afford an overseas holiday though, with this wage. Now let’s double this up, and see what kind of lifestyle can we afford if we earn £80K a year.
£80,000 annual salary
Affluent neighborhood in London (you can live here if your salary is £80K a year)
A yearly wage of £80K would definitely guarantee a comfortable lifestyle in London. You can afford luxury, en-suite double rooms or studio flats, a luxury car, and luxury holidays. Let’s see the break-down:
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- NET INCOME: £4,500
- Rent: £1,450 (very nice studio flat in an elite area, such as Knightsbridge or Chelsea)
- Bills for the accomodation: £400 (electricity, council tax, water, Sky, etc)
- Car leasing: £550 (you can get a Tesla Model S)
- Car electricity recharge cost: £100
- Mobile phone contract: £50
- Food: £500
- Leisure: £450
- Clothes: £300
- Other spendings: £200
- Holiday: £500 (£6K/year)
- TOTAL: £4,500
As you can see from our calculations above, you’ll need to earn at least £40K in London, in order to live a stable life. With £20K a year, you’ll struggle to live worry-free, and the quality of your life will be very poor. With £80K salary, in contrast, you’ll enjoy a lavish lifestyle, living in the most elite areas of London, driving a Tesla car, and taking expensive holidays abroad. We hope that this article will motivate you to learn more and better yourself, in order to get as close as possible to the £80K a year.
In our next articles we’ll be calculating your lifestyle based on different circumstances, for example we’ll assume that you are married and live as a couple, and also, assuming that you are married and have kids. We hope that you’ve enjoyed this post about finances.
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