As I write this post, on my MacBook Air with iPhone nearby, drinking a gin with posh tomato juice, you would think finances would be cushy, right? However, I have a literal 50p in my joint current account, and £1.58 in my savings account. Literally, without a measure of exaggeration, that’s how much me, David and a cat have to live on until payday in a few days.
Despite having a combined annual income of over £50,000, even with having no children (Dual Income No Kids ftw) it’s still a struggle at the end of the month once taxes, student loans, NI contributions and basic living costs are taken out of the equation. Back in the eighties, the cost of a house was roughly two to three times an annual salary. Now? It’s over ten times. With rising commuting costs, living in London is becoming impossible.
Yes, life as a millennial (someone entering their thirties right about now) isn’t the brightest when it comes to finances, housing or savings. Living in London, or even around it, brings with it extortionate costs. So, how have we managed to live as DINKs?
And if you’re a late twenty to thirty something living in another city, how are you finding the below?
Where to live
This is a huge issue and one not being solved any time soon.
Unless you have very generous parents, a lovely little trust fund, or manage to win big on the horses, purchasing a house anywhere close to London is out of the question. Even the smallest apartments near a tube station in Zone 3 will cost upwards of £200,000. Oh you’ll be sleeping in your kitchen, or it’ll literally be a boat, and forget that £200,000 can get you a three storey town house with sea views in Plymouth, but it’ll be yours!
Except when you need to upgrade to something with a real bedroom, or the nausea kicks in, because everything else has increased in value that it essentially leaves you out on a limb and in the same position you were when you got on the ladder.
For now, renting seems like the most viable, if expensive, option (given together on our wage David and I could only get a mortgage for maximum £220,000 – and that would be with over 60% of our salary being spent on house). And as more of us move away from the city in the hopes of increasing our standard of living, it’s no wonder the green fields of Essex are being ripped up to make way for more homes for Londoners escaping the city.
Of course, the £800 combined commuting costs is another thing all together…
This is where a little bit of savvy pays off. Everyone should have an ISA, a tax-free high interest account, to start off with. These come in all shapes and sizes for all ages, and some have withdrawal limits, meaning once the money’s in, it costs you to take it out. A brilliant incentive for those (like me) who dip into savings for a cheeky pizza every week.
Alongside that, banks offer a range of high interest current accounts and super savers, where the limits of what you can deposit are low, but interest is really high. Again, with penalties for taking money out of the pot, it’s simple to save over £1,200 a year with a little deposit every month.
MoneySavingExpert has been my best friend for years, helping me find a nice 0% credit card, ISA and saving account, which means although it’s short term pain putting away funds I want to spend on cocktails, it’s long term gain when it comes to holidays, big spends and little emergencies.
Because that’s how we need to do things. With a hell of a lot of salary being spent on essentials such as housing, bills, commuting and necessities, it’s likely big spends will need to be managed wisely.
Carry on walking
Living centrally means most don’t bother with a car. But as we live on the outskirts, a car really is a luxury. For two years I couldn’t afford the outright cost of a car which meant spending hundreds on taxis and trains. And getting a rust bucket on its last legs just didn’t seem that great an idea. All it takes is the radiator to fail or the engine to malfunction and that’s thousands of pounds down the drain.
As my sister and her husband are finding.
Sure, their little blue Golf, bought from a friend who’d upgraded to a showier saloon, was cheap. But with issues left right and centre, 2016 saw it resigned to the scrap heap and they’ve had to borrow my van, kindly given to me when my dad passed away, during the week.
Now, they’re thinking of leasing a car which means paying a certain amount every month for a brand new car, which then gets exchanged for another brand new car after the lease is up. Think of it like all the benefits of having a brand new car without the torture of paying £25,000 up front.
Life in London isn’t easy, especially not for my generation. But with planning and sacrifice, I wouldn’t be anywhere else (for now!).
Thanks to Parkway for the inspiration for this post.