Is £100k a huge salary?

I know who you are thinking of! Yes, you are right – this post is partially inspired by our Chancellor Jeremy Hunt’s statement.

The whole country seems to rage at his comment that £100k a year is “not a huge salary” for people in his Surrey constituency, and started to quote that the UK’s medium gross annual salary for full-time employees was £34,963 in April 2023.

This post is not to criticise or defend our Chancellor’s statement, as I think it is a very subjective question, which very much depends on each person’s circumstance, including career choice, location, spend habits, marital status, and family situation.

What I would like to do is to share with you the personal perspective of a family of two professionals who live in London and work in financial services.

Is the £100k salary huge for financial services?

Mr. FQ reached the £100k salary in 2012 when he was 29 after 8 years of working. He didn’t start out in financial services. As any other graduates, he just grabbed whatever job he could in any sectors. His salary in the first 5 years reached £45k. He then moved to financial services and only after 3 years, his salary had doubled. On top of that was a 50% bonus.      

I reached the £100k salary in 2023 when I was 34 after 10 years of working. You probably think the age and working experience don’t seem to add up. Yes, that’s right – I spent longer in education than an average person and then took a two-year career break for raising a young family.

A high paid career wasn’t really in my mind when I started. I, in fact, started in a not-for-profit sector. My salary started out at £28k, then moved up to £45k after 3 years and then reached £72k (without any bonuses) after 10 years of working. It only jumped to the £100k when I decided to make the move to financial services, and on top of that was a 30% bonus. So technically I almost doubled my total compensation by moving to financial services.  

Both Mr. FQ and I are not working in front office. Front office staff have much higher compensations. The total compensation for front office graduates with one- or two-year experience would be already more than £100k.

So £100k is certainly not huge for many who work in financial services, and in fact, is a starting salary for some.

Is £100k salary huge for living in London?

In 2016, I was off in my career break, unpaid with a one-year-old. Mr. FQ was the sole breadwinner. Our family of three all depends on the £100k salary.    

Salary of £100k is c.£61k after tax and pension.

The biggest single cost for us was the mortgage repayment, which was £14k. We had c£300k mortgage over 30 years. 

Other basic living costs such as council tax, utilities, food, travel and car maintenance added up to £22k.

We love travelling, so even when the little FQ was just above a year, we brought her overseas a couple of times per year. The total travelling and eating out costs were £15k.

We also supported other family members and did some giving, totalling £17k.

The total full year living cost for us was, therefore, £68k!

Oopsy, we overspent!

Fortunately, we had Mr. FQ’s 50% bonus to call on and we had a small net profit (£6k) from our investment property.

In the end, we managed to have some spare cash to save and invest, mainly thanks to this 50% bonus.

Looking back, I think £100k salary by one person at that stage of life did provide a comfortable living for a family of three with a simple lifestyle in London (we always tried to travel cheap).

But it wasn’t enough when we needed to provide support for other family members, leaving no opportunity for saving or investing. Bearing in mind, it was 2016 before inflation rocketed.

Is £100k salary “huge” generally?

While I’m not sure about “huge”, I do think it is a very good income generally! People still talk about 6-figure earnings as a desirable mark.

It is counted as a high income according to the UK government’s statistics. In 2021-22, £100k salary is between 96^th and 97^th percentile of the country tax payers’ income (£97.2k salary is 96^th percentile and £111k is 97^th percentile).  

If you have no family to support and don’t spend much on luxury and branded goods, you will have a plenty spare to invest and save and hit your financial freedom goal early.

But if you have a debt to pay or other family members to support, or if you are after branded stuff and luxury lifestyle, then clearly no salary could be counted as “huge”.

£100k salary also means different things in different countries. If you bring this income to Asia, where living expenses are dirt cheap, you probably can live as kings and queens!   

As I said, it is all subjective!