Up next in 10
Squeezed between inflationary cost pressures and taxes that hit middle earners hardest, is £100k the worst salary in Britain?
City AM's features and opinion editor Alys Denby tackles the question, alongside historian and author Eliza Filby, and financial coach Philly Ponniah.
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0:00
Because I think in your words 100K is
0:01
basically one of the worst salaries you
0:03
can earn. The marginal tax rate is so
0:05
high.
0:05
Exactly. So between that 100 and 125,000
0:07
because you're losing your personal
0:08
allowance as well. You're basically
0:10
being taxed the 20% you you had free on
0:13
top of your 40% tax. So that's why it
0:15
ends up being this 60% lack of hope
0:19
and powerlessness that is evident in the
0:21
working class and the middle class in
0:24
this country. And that is dangerous. I
0:26
would argue politically dangerous,
0:27
socially and economically dangerous. Is
0:30
£100,000 the worst salary you can earn
0:33
in Britain? It may sound like a decent
0:35
wage, but when you factor in fiscal
0:37
drag, the rising cost of living, and the
0:38
cliff edge for state funded childare,
0:40
many people who are earning six figures
0:42
don't feel wealthy at all. In fact, they
0:45
feel angry. And this matters not just
0:48
because the top 10% of earners pay 60%
0:50
of all income tax or because of the
0:52
number of better off people who are
0:54
leaving the country. It matters because
0:56
if Britain is a country where a
0:57
comfortable middle-class life is beyond
0:59
reach, then it is country without hope.
1:03
I'm Alice Dembi, opinion and features
1:04
editor of Cityam. And in this episode of
1:07
Free Thinking, I'm discussing the 100K
1:09
tax trap with author and citym columnist
1:12
Eliza Philby and wealth adviser and
1:14
financial influencer Philly Paya. Eliza
1:17
Philly, thanks so much for being here,
1:18
especially on a tube strike day. So,
1:20
congratulations on making it in. Um, but
1:22
we are here to talk about the equally
1:24
sympathetic subject of high earners.
1:26
Let's start with this question. Is 100k
1:28
a high salary, Eliza?
1:31
Well, I wrote an article with this very
1:33
headline and saying that 100k wasn't a
1:36
high salary. And we can talk about why
1:37
in respect to the childare allowance and
1:40
the tax um burden that this this kind of
1:43
tax bracket those on 100k are you know
1:46
make up 10% of earners but pay 50% of
1:49
all tax receipts and are increasingly
1:52
feeling n out of 10 people that earn
1:54
over 100k do not consider themselves
1:57
wealthy which is an extraordinary
2:00
statistic given that I think
2:02
psychologically the 100k is like a
2:04
threshold that people aspire to reach.
2:06
each, but actually those that have don't
2:08
feel like it's given them the wealth
2:10
they thought it would. And so this isn't
2:12
about saying you're on the bread line if
2:14
you earn 100K. This is more about saying
2:16
there's a mismatch of expectations of
2:20
what 100k salary brings you in today's
2:22
Britain.
2:23
And Philly, you regularly work with
2:25
people who are earning decent salaries
2:26
but not feeling it in their pockets. Can
2:28
you tell us about some of the challenges
2:30
that they're encountering?
2:32
Absolutely. So I would say it it usually
2:35
um the conversation usually starts
2:36
around child care. So if they've got one
2:38
child at nursery or two, you know that
2:40
that's huge sums to pay for that. You
2:42
lose your childare funded hours once you
2:44
go over the 100,000. Um some people are
2:47
planning to have them and then they
2:48
don't realize that they miss out if
2:49
maybe a bit of interest from cash in the
2:51
bank has pushed them over. A lot of
2:53
people don't understand this um concept
2:54
of net adjusted income which is where
2:56
your um your salary kind of adds on your
3:00
you know your your um bonus and um if
3:03
you get um taxable benefits at work
3:05
benefits in kind. So sort of all sorts
3:07
of numbers add to your salary um and can
3:09
jeopardize receiving funded childare
3:11
hours. So we've got people kind of
3:12
worrying about um childare costs.
3:15
And is there anything you can do if
3:17
you're confronted with these huge child
3:18
care costs? Well, it's just making sure
3:20
that this net adjusted income figure
3:23
stays below that 100,000. So, it's it's
3:25
really kind of taking note every month
3:27
what you're getting, including anything
3:29
like private medical insurance sometimes
3:31
counts as a benefit in kind. So, that
3:33
adds to your salary. Um, an example
3:36
recently, someone as an individual, it
3:38
added £2,000 to her annual salary um if
3:41
she was insured for through her work
3:43
from medical. Um, adding her daughter
3:44
made it over 5,000.
3:46
Wow. and adding the husband made it
3:48
8,000 for the family of three. So for
3:50
her, she didn't end up adding the the
3:53
daughter or the husband. They've gone
3:54
and got their own environment medical
3:55
insurance. Um so her benefit in kind of
3:57
that was £2,000. So that added to the
3:59
income. So it's it's getting clear on
4:00
what adds and then thinking about what
4:02
can can bring it down below 100,000 if
4:04
you kind of near that near that level um
4:07
and putting money into your pension. So
4:08
you can either do that from your from
4:10
your net salary um into like a
4:12
self-invested personal pension which is
4:13
a SIP and that figure comes off your
4:16
pension or through salary sacrifice
4:17
through work putting more money into
4:18
your pensions you're bringing your
4:19
salary down that way.
4:20
Great tips. I mean if we want to know
4:22
how politically sort of charged this
4:24
issue is just think back to when Jeremy
4:26
Hunt sort of said I think it was in the
4:28
run-up to the last election that his his
4:31
he was running for Tory leader.
4:32
Oh right even worse. Yeah. um even more
4:35
uh you know damaging to his image he you
4:39
know he said in a radio interview I
4:40
think it was that you know a lot of his
4:43
sur constituents were really suffering
4:45
um on 100k and that sort of blew up
4:48
didn't it and and and and sort of as and
4:51
that's I think illustrative of how
4:52
difficult it is to talk about this and
4:55
how politically unwise it is to talk
4:58
about this entirely
5:00
and then also I think if people arranged
5:02
a mortgage a few years ago when it was
5:03
2% for their mortgage payments. They
5:06
potentially borrowed a bit more. They
5:07
didn't maybe think about affordability
5:09
for when interest rates would rise. Um
5:11
because we had interest rates that were
5:13
low for so long. I think people didn't
5:15
think they would go up to 5%. And so
5:16
actually outgoings have gone up, you
5:19
know, £500,000 more a month. And
5:21
actually that is where potentially there
5:23
might have been a bit of buffer um to
5:25
have some, you know, discretionary
5:27
spend. And actually I'm I'm seeing quite
5:28
a lot of people where there's not much
5:29
left at the end of the month. And you
5:31
know, some people are like one month
5:32
away from kind of kind of going into
5:34
debt.
5:34
Let's talk about some of the huge
5:36
distortions that this has on people's
5:37
behavior. You have people refusing pay
5:39
rises because they don't want to go over
5:41
that 100k. Um and and and also you have
5:44
people changing their behavior. I mean,
5:45
you have people who've put, as you say,
5:46
put off having second children, put off
5:48
fertility treatment and so on. Um
5:50
because I think in your words 100K is
5:52
basically one of the worst salaries you
5:54
can earn. The marginal tax rate is so
5:55
high.
5:56
Exactly. So between that 100 and 125,000
5:58
because you're losing your personal
5:59
allowance as well, you're basically
6:01
being taxed the 20% you you had free on
6:04
top of your 40% tax. So that's why it
6:06
ends up being this 60% um and then
6:08
there's national insurance on top. So
6:10
it's it's um punitive at that level. Um
6:12
and I'm seeing people where they wait to
6:14
have a second child once the first has
6:16
started school. So then be kind of that
6:17
four-year gap. They might have maternity
6:19
leave where they then have to, you know,
6:21
take the child out of nursery sometimes
6:22
on their maternity leave. and don't
6:24
know. I've got two small children.
6:25
Having them both at home would have been
6:27
quite a lot during maternity leave. So,
6:28
you know, um or just actually only
6:30
having one child. Um you know, I heard a
6:33
question the other day from somebody who
6:34
was 32 saying, "Why why bother having
6:36
children? It's going to cost them."
6:38
Pretty
6:38
Yeah. And that's so true because also
6:40
we're having babies later. So, having a
6:43
fiveyear gap between the two Yeah.
6:46
is quite impossible for a lot of women.
6:48
I had my first child at 36. There's no
6:49
way I could have waited five years for
6:51
the next one. and I didn't I didn't feel
6:52
I could in in terms of my fertility sort
6:55
of being available in that sort of crude
6:57
phrase. But I think that the the the
7:00
sort of response I saw when I wrote the
7:02
piece was very much like um I had NHS
7:06
doctors saying I'm only working four
7:08
days not five. um a lot of people not
7:10
taking pay rises, deliberately trying to
7:13
manage how much they earn in proportion
7:17
to how much their partner earns to
7:18
ensure that they get the certain tax
7:20
breaks and benefits particularly in
7:21
respect to childare. It's like trying to
7:24
navigate your earning power and frankly
7:26
your productivity in a s around a tax
7:30
system that is so punitive to high high
7:34
earners. Yeah.
7:35
That doesn't seem to me to be a recipe
7:37
for growth. I know. And people choosing
7:40
the very opposite.
7:41
Exactly. And people choosing the four
7:42
days a week um or even three and then
7:45
not thinking about the impact that might
7:47
have for your career like longer term.
7:48
Yeah. Um and and it's because also then
7:52
if you're suddenly kind of up on a 150
7:54
160 which clearly is a very good salary,
7:56
there's also a real kind of anger that
7:57
not getting this funding because you
8:00
think I'm paying so much in tax at this
8:02
level that the take-home pay per month
8:04
between someone on like 150 and 99 once
8:07
you factored in childare but there's
8:09
hardly any difference.
8:10
Well, yeah. I think that's the
8:11
statistic, isn't it? That if you uh that
8:12
you need to earn £149,000
8:15
before you make up for the losses that
8:17
you have in terms of childare. Yeah.
8:19
So it's and a scared system as well,
8:21
sorry Eli, because you could have two
8:23
earners both on 60 and you would still
8:26
get the entitlement, but the minute one
8:27
of you goes a pound over 100K, you lose
8:29
it all.
8:30
And that's what's interesting is
8:31
normally these tax um kind of or child
8:34
care conversations are just impacting
8:36
the woman. But the response I got from
8:39
my article was very much from husbands
8:40
going, "Oh, no. I'm being very careful
8:42
about how much I earn
8:43
to to to to make sure that we don't go
8:45
over that. I don't go over that
8:47
threshold and impact the childare as a
8:50
household." Exactly. And I don't think
8:51
we talk about the sort of I've got
8:53
people who are sort of lying awake at
8:54
night because they are anxious
8:56
especially from their job like tech
8:58
sales where you get you know really big
9:00
commission. Um and one month might be
9:02
you know is that a very lumpy income. Um
9:04
and sort of not quite knowing how to
9:06
plan for it. Um I think on top of the
9:10
funded childare hours have been rolled
9:11
out to now from the age of 9 months
9:13
which is amazing. you know, I think that
9:15
was a great, you know, that's welcome
9:17
because, you know, people have always
9:18
said waiting until your child's three to
9:20
get any benefits is quite quite hard.
9:22
Uh, but I think, you know, that in
9:24
response to that, the nurseries had then
9:26
upped their kind of daily fee because
9:28
the government subsidy isn't enough.
9:30
So, I'm not
9:32
blaming the the the nurseries at all.
9:35
Um, you know, my my nursery for my
9:37
youngest said that the the funding
9:39
doesn't even cover the the rent they're
9:41
building. So, you know, it's sort of
9:43
Wow. You understand? You we don't want
9:44
these these places shutting.
9:46
Well, hundreds and thousands of
9:47
nurseries are shutting because they just
9:49
can't make it work financially and that
9:50
has all sorts of terrible knock-on
9:52
problems for productivity, for women's
9:54
ability to work and so on. But it's not
9:56
just about childare. I mean, you you
9:57
modeled an example of a Henry who was a
10:00
childless um but who was still really
10:02
struggling because of the cost of living
10:04
which has gone up hugely and is a fiscal
10:06
drag which has dragged many more people
10:07
into paying much more tax. And housing
10:10
is a huge part of this as well, isn't
10:11
it?
10:12
Yeah. And we when we modeled it, we
10:14
deliberately decided that Henry, and
10:16
let's remember that's an acronym for
10:17
high earners, not rich yet. If you don't
10:19
know what that means, Henry, we wanted
10:21
him to be child-free
10:23
and not have the burden of child care to
10:26
really to really illustrate how 100k
10:29
isn't really even covering the basics
10:32
for those that think it should. And this
10:35
is the important thing is it's we're not
10:36
saying that 100k is a bad salary and
10:39
that you're you know you're on the bread
10:41
line and that you can't afford to exist.
10:42
It's more that it's a a case of like
10:46
mixed expectations. So we modeled Henry
10:49
who was on 50k a year in 2019 and by
10:53
2025 had increased his salary up to
10:56
100k. And yet in terms of disposable
11:00
income, once you took out housing costs,
11:02
once you took out the rising food costs,
11:05
once you took out sort of all those
11:07
essentials, it only resulted in a 6K 6K
11:12
salary increase of disposable income.
11:14
A year,
11:15
a year, not a month. and go to the
11:18
article, see how he broke it down. But
11:20
it it is quite striking as you say,
11:22
Henry
11:24
is someone who cannot afford to get on
11:26
the housing ladder in London unless he
11:29
has the Bank of M and Dad, as which as
11:30
we know, which is over 50% of Londoners
11:33
who are able to become first-time
11:35
buyers, have that Bank of Mad support
11:38
system to get on the housing ladder. And
11:40
so I think this is this is why we wrote
11:43
the piece because it's it's actually
11:44
about those that on paper seem to be
11:47
doing well. 100k feels, you know,
11:50
psychologically like a real milestone in
11:52
your professional career. At least it
11:54
should. And yet there's no feeling of
11:58
reward. reward in terms of big ticket
12:01
items in life and critically reward in
12:05
disposable income and just you know
12:07
let's say shopping at a certain
12:09
supermarket over another supermarket or
12:11
you know eating out in certain
12:14
restaurants you know and I do and I do
12:16
think that certainly um those that earn
12:19
100k outside of London perhaps have less
12:22
issues on the housing front
12:25
there is a regional dimension to this um
12:28
I think those that earn 100k pay as
12:30
freelancers. Going back to your point,
12:33
it's harder to calculate how you manage
12:36
those sums and and play the system as it
12:38
were. There's all sorts of variables.
12:40
It's harder for those with kids, of
12:42
course. Um, but the fundamental thing is
12:44
is that 100k doesn't get you perhaps
12:47
what you think it should.
12:48
Let's talk about why this matters, why
12:50
people uh watching this who may not be
12:52
earning 100K should care about this. And
12:54
we've touched on some of the things
12:56
which is of course that these people pay
12:58
large amounts of taxes which pays for
12:59
public services that we all depend on.
13:01
We've talked about the impacts on
13:03
growth. But the point is some of these
13:05
people will leave and I think there's a
13:08
deeper question here about what a
13:10
country what kind of country do we want
13:12
to live or do we want to live in a
13:13
country where middle class aspiration
13:17
the kind of ordinary things that people
13:18
might want like shopping in going on
13:20
holidays owning a house are so out of
13:23
reach. M I mean I think there's a really
13:27
important conversation to be had around
13:31
the sort of downward social mobility we
13:33
have seen in this country amongst those
13:35
under the age of 45. you know, I wrote a
13:37
whole book about it essentially. Um, and
13:39
those that have managed to um,
13:42
millennials and Gen Z that have managed
13:44
to to secure some level of financial
13:47
stability and and as aspiration have
13:50
often done it with the help of mom and
13:51
dad. Um, plus a professional career. You
13:54
frankly need both. And I think therefore
13:59
there needs to be a conversation around
14:01
opportunity, economic growth, tax. Uh
14:05
you know the economic problems we have
14:07
in the round in this country can't just
14:09
focus on the pockets of serious poverty
14:12
we have in this country. the lack of
14:13
investment of course, working poverty,
14:15
huge problem, but also like you say the
14:18
decline of middle class aspiration and
14:20
mobility and security because you need
14:24
to look at both and there needs to be
14:25
frankly a solidarity between the working
14:28
class and the middle class. You know,
14:29
Cole Marx wrote about this in the 18th
14:31
premiere, like you need the petty
14:33
bourgeoisi to buy into the sort of the
14:36
revolution that needs to happen because
14:37
we do need a a reckoning of of what it's
14:40
doing to middle class aspiration and
14:42
immigration is talked about a lot and I
14:44
know you seeing that in your clients.
14:46
That's just one aspect of the sort of
14:49
lack of hope
14:51
and powerlessness that is evident in the
14:54
working class and the middle class in
14:56
this country. And that is dangerous. I
14:58
would argue politically dangerous,
14:59
socially and economically dangerous.
15:01
I think you see this in your clients
15:03
don't.
15:03
Yeah. That sort of like what's the point
15:05
um which is which is awful. It's so it's
15:08
really depressing. It is really
15:10
depressing. I've seen a few people kind
15:12
of move um in recent months choosing you
15:15
know Portugal, Dubai, you know further
15:17
east and just where you know lower taxes
15:20
and I mean in Portugal it's not even
15:22
that much lower but just um if you can
15:24
get a similar salary better standard of
15:26
living maybe not work quite so many
15:28
hours um and and people particularly
15:30
with you know young children it it's
15:33
sort of immediate to see the benefits
15:35
and that's such a shame when you know we
15:38
don't want these people leaving our
15:39
country when when they are, you know,
15:41
helping grow the economy or, you know,
15:43
paying paying tax and and being higher.
15:45
I think you also talked about some of
15:46
the differing attitudes to wealth
15:48
between people who maybe born with it.
15:49
So, some of the people you're talking
15:50
about who had uh help from their parents
15:52
and people who are kind of the first
15:53
generation in their family to do well.
15:55
Absolutely. And I help a lot of people
15:56
where they didn't have anyone at home
15:58
talking about these things growing up.
16:00
So even just really sort of simple terms
16:02
of you know looking at where where your
16:04
you know where your money is in the bank
16:06
um you know using an ISA knowing that's
16:08
something you can put into every year
16:10
that a cash iser kind of will will keep
16:12
as cash and probably not keep up with
16:14
inflation whereas you kind of can invest
16:16
it in a stocks and shares is and that
16:17
will grow. Um so just sort of kind of
16:20
things that you might have heard if you
16:22
had grown up with family with money
16:24
although not always the case. um uh you
16:27
know friends of mine who who kind of
16:29
knew what to do often have parents who
16:31
are accountants and that's like pretty
16:32
much the only people who knew what to do
16:34
with money. So it's, you know, but I I'm
16:36
I'm seeing um and particularly if you're
16:38
the first person to be kind of high
16:39
earning, there's there's an awful
16:40
pressure sometimes they can put on
16:42
themselves. How much do I need to
16:44
support, you know, parents, siblings, um
16:47
you know, community, a big one as well.
16:50
Um and some of that is from, you know,
16:52
pressure from that side saying, you
16:54
know, we expect it. they think they're
16:56
on this really high salary 100,000 you
16:59
know six figures you know but like that
17:01
sort of miss you know that um those
17:02
expectations versus what's reality and
17:05
then actually really being stretched
17:07
because they feel that's an obligation
17:09
or sometimes it's self-imposed and
17:10
actually they think I'm earning this
17:12
really high salary you know I should be
17:14
sharing it should you know it's it's not
17:16
necessarily true but it's that feeling
17:19
and because as a society we don't talk
17:20
about money
17:22
it it becomes it becomes an issue Um I I
17:26
think the you're absolutely right and
17:28
there is a massive difference between
17:29
sort of first generation wealth and and
17:32
second generation wealth and and if that
17:34
first generation wealth is reaching a
17:36
certain level but is not providing a
17:38
level of security that you think it
17:40
should there's a paranoia and a and a
17:42
and a fear around that that is is is
17:45
really hard to to to address and
17:47
rectify. But I think just getting back
17:49
to the politics of this for a second,
17:51
when I wrote the the article, um I knew
17:53
it would
17:55
stir some some frankly rightful hate,
17:58
right? Because
17:59
people read City.
18:00
Yeah. Well, well, and it it's it's fair
18:02
because there's a lot of people
18:04
struggling. There is a lot of people who
18:07
don't have, you know, one or two months
18:09
um you know um savings in the bank in
18:12
case just in case just in case money.
18:14
there's a lot of people who are
18:17
dependent on, you know, obviously
18:19
welfare payments. There's a lot of
18:20
people there who are not getting paid um
18:22
enough. However, I think there's a
18:25
really important
18:27
kind of political edge to this is that I
18:30
think for a long time the Treasury, both
18:32
Tory and Labour have relied on Henry's
18:34
to kind of,
18:36
you know, stump up more and more. And I
18:39
think there is becoming a tipping point,
18:41
a dangerous tipping point where you know
18:44
people are leaving or people are
18:46
thinking what's the point or people are
18:47
working less. And actually the politics
18:50
of that needs adjusting and I think
18:52
there's also with reform a politics of
18:55
division that is very prevalent I think
18:58
in this country right now which is
19:00
either people that pay a lot of tax
19:02
going where's that money going? It's
19:04
being squandered. It's not being used
19:06
properly. there's people not working and
19:08
claiming benefits. So that division um
19:11
for from higher earners to lower earners
19:13
and then lower earners going you're
19:15
earning all that money you're you know
19:17
you have a lovely lifestyle you're not
19:19
suffering in the way that I am and
19:21
actually there's so many commonalities
19:23
between those two groups and there's so
19:25
few politicians talking about it and
19:28
actually I think there is a really
19:31
serious as I said reckoning economically
19:33
that Stuart Rose talked about is is that
19:37
there's a and and Britain felt it in the
19:39
70s as well, this sort of wakeup call,
19:42
whether it's going to be a call to the
19:43
IMF or whether it's going to be a
19:45
political wakeup call domestically. I I
19:48
feel like we're edging towards that. And
19:49
this is part of that conversation, a
19:51
really important part of that
19:52
conversation. It's not the only
19:53
conversation that
19:54
and I don't think it'll be picked up by
19:56
this government because, you know, you
19:58
don't want to change a tax rate. That
20:00
that looks bad. You know, you don't you
20:02
don't want to be seen to be doing
20:03
anything that benefits someone earning
20:05
over 100,000. you know, it looks it
20:06
looks terrible like politically. Um, but
20:09
at the same time, it it's driving all
20:11
these behaviors we're seeing.
20:12
But the politics of this is that, you
20:14
know, the private school VAT increase
20:16
was obviously, you know, optically, you
20:18
know, great for for for Labour Party
20:20
solidarity, but how many people really
20:22
know about the f fiscal drag? If a
20:24
politician made some statement on that,
20:26
you know, very few people would
20:28
understand it and it it wouldn't be have
20:29
the same sort of cache as the the
20:32
private school fees that and there is, I
20:34
think, things that the Treasury can be
20:36
doing and thinking about and politicians
20:38
articulating
20:40
that that mean that these problems are
20:42
addressed.
20:44
This is impacting growth. this is
20:45
impacting critically optimism that I
20:49
think is a most of the conversations I
20:51
have with within my peer group you know
20:53
across all quite various different
20:55
professions groups socioeconomic divides
20:58
are there's no hope in this country for
21:00
young people
21:01
there's no hope
21:02
specifically for young people and what's
21:03
interesting is our parents are starting
21:05
to have that conversation as well
21:07
I also think that this has direct
21:08
implications for demands on the public
21:11
person I mean I literally heard the head
21:12
of the RMT on the radio this morning you
21:14
know they're on strike at the moment.
21:15
They already earn a pretty decent wedge,
21:17
well above average. But this uh trade
21:19
union said, "Well, you can't 100k
21:20
doesn't buy your house in London, so
21:22
that's why we're on strike." I mean, so
21:24
that has direct consequences for this
21:25
Labor government on how much it's going
21:27
to have to spend. Um, and yeah, as you
21:29
say, I think the political ramifications
21:31
of living in a country where it seems
21:33
impossible that young people can have a
21:34
better life than their parents are
21:36
devastating. Absolutely. But let's try
21:38
and talk about some solutions. Philly,
21:41
if you are a Henry and you are in this
21:43
position, what can you do to improve
21:45
your finances?
21:47
So, whenever I work with someone, I
21:48
start off with, well, first of all,
21:50
what's your money story? What are the
21:51
narratives you're telling yourself
21:52
around money? Um, what did you hear
21:54
growing up around money? Is it true? You
21:56
know, questioning that because sometimes
21:57
our behaviors around money really will
21:59
will kind of stem from that. And, you
22:01
know, that can be quite a light bulb
22:03
moment straight away. But then getting
22:05
really clear on what you want, what
22:06
matters to you, like what are your
22:07
values? These are things we do not often
22:09
stop to think about. You know, what
22:10
matters to you and then how can you then
22:12
be intentional with spending, saving,
22:15
and then ultimately investing. And it
22:18
can make choosing to spend on something
22:20
and then again it makes it easier to
22:22
choose what you're spending on and also
22:24
choose not to spend on something. If you
22:26
say that is not getting me close to my
22:27
goal, that does not make me live kind of
22:29
in alignment with my values. And this
22:31
might sound flowery. It's really not. It
22:33
actually is life-changing. And I know I
22:35
know it works because you know it works
22:36
for my clients essentially. So getting
22:38
really clear on what matters. It's worth
22:40
spending the time thinking about what do
22:41
you care about? So like for me one of my
22:43
top values is connection. So in my diary
22:46
each week I've got time with my husband,
22:47
time with my children. Um because
22:50
you know if you'd have asked me probably
22:52
five years ago, I'd have said, "Oh,
22:53
family. It's like a real connection."
22:54
Well, you know, wrangling two children
22:56
into a double buggy.
22:57
Yeah.
22:58
Is family time, but it's not not
22:59
particularly enjoyable time. So actually
23:00
for me, I've had to get into like what
23:02
actually is it? and it's like the bit
23:03
where you're like making them laugh
23:04
before bed or something and that that's
23:06
real connection. So if you can then
23:08
purposely put connection time and that's
23:10
you know my book group each month with
23:11
my friends and it's so kind of it's not
23:14
just money it's it's your time and your
23:15
energy. So kind of getting really clear
23:17
on that and this can then stem through
23:19
into then how you spend your money. So
23:21
those are sort of more um I guess
23:23
philosophical than actual practical but
23:25
then you know the things like what
23:27
interest rates your cash getting in the
23:29
bank. Is it getting enough? Can you put
23:31
aside money for longer term that you
23:33
could invest? you know, think about that
23:34
growth and just, you know, are you
23:36
putting money into your pension? Do you
23:37
know what you put into your pension?
23:39
Um,
23:41
but because you get tax relief on on
23:43
pension contributions, that is something
23:45
that um it is for future you. Um, so you
23:48
get a bit less in your pay slip, but
23:50
actually then that can start compounding
23:51
and growing over time.
23:52
You're absolutely right on the kind of
23:54
financial education thing. One of the
23:55
things that I've seen really
23:58
surprisingly is the amount that Gen Z
24:00
are investing.
24:01
Yeah. there's massive rise and just
24:03
under 50% of of um Gen Z in this country
24:07
invest beyond their pension right now.
24:09
It may be short-term, it may be small
24:11
amounts, but the level of financial
24:13
education that Gen Z are doing either on
24:18
Tik Tok or on YouTube or various other
24:20
platforms um can only be welcomed, I
24:24
think. And that speaks to a generation
24:25
that know that they cannot live by one
24:27
salary alone. Yeah.
24:28
And they need multiple streams of
24:29
revenue, frankly. And and I think that
24:32
there is a level of financial savviness
24:35
and frankly sexiness amongst Gen Z. I
24:38
think I'm really worried about this man
24:40
risk
24:40
of course of course
24:41
because a lot of them invest in crypto
24:44
and there's nothing wrong with having
24:45
crypto as part of the portfolio but when
24:47
it's not understanding your and I get a
24:50
lot of comments and questions around
24:53
you know you know huge percentages of of
24:56
the portfolio being in crypto and not
24:58
understanding the volatility of it and
25:00
not actually understanding it and you
25:02
know thinking about being diversified
25:03
and and across a sort of number of asset
25:05
classes just you know and countries and
25:08
um um companies and and that's something
25:11
that's missing. So although it is great
25:12
to see% investing
25:14
100% I think there is there's there's
25:16
there's a sort of level of sort of wild
25:18
west nature of financial advice out
25:20
there which is why sort of regulating
25:21
financial advice is so important but I
25:23
think the bit I'm worried about is the
25:25
bit in the middle those that didn't get
25:27
and let's remember Jenzia are the
25:28
beneficiaries of autoenrollment as well.
25:31
It's that rump in the middle of
25:32
millennials and Gen Xers's, number of
25:34
whom are self-employed and have had sort
25:36
of slightly sort of sort of all over the
25:38
place careers and and have multiple
25:40
little bit of pension pots and haven't
25:41
consolidated them or have years of being
25:43
freelance and not saved and all that
25:45
kind of stuff. If you have children,
25:47
obviously that massively impacts your
25:48
pension and and and now just thinking
25:51
about what does retirement look like in
25:54
an age where I'm probably going to have
25:55
to work longer probably. Who knows? Very
25:58
few millennials believe the state
25:59
pension will be around when they retire.
26:01
And just thinking very differently about
26:03
that sort of retirement model that
26:06
perhaps our parents were able to enjoy.
26:08
Inheritance obviously comes into this. I
26:10
know loads of people are not paying into
26:11
their pension but are expecting an
26:13
inheritance to collide with their
26:15
retirement.
26:16
But that's risky as well because you
26:18
decide to tax that.
26:19
Totally take it away.
26:20
Usually spend it on care costs.
26:22
I know. Exactly. I know someone who who
26:24
said to me I'm not paying into my
26:25
pension. She's a lawyer. I'm not paying
26:28
into my pension. My cost of living is
26:29
too high. Um, school fees, etc., etc.,
26:32
but my father-in-law, I suspect, will
26:36
kick bucket when I bounce to retire. So,
26:38
therefore, it does all sort of happen
26:39
wonderfully, synergized at the same
26:41
time. I said that's a great belief you
26:43
and faith you have in your marriage
26:45
number one and secondly his life
26:48
trajectory but I think it's really sort
26:50
of that that bit in the middle that have
26:53
are at the point of pressure where cost
26:56
of living you know expenses you know the
26:59
the sort of
27:00
need to save is there but the desire and
27:03
and aptitude for saving isn't quite
27:04
there potentially but also maybe haven't
27:07
thought about investments and savings in
27:09
the same way that even Gen Z are however
27:11
for risky.
27:12
I think that that's a reasonably
27:14
positive note to end.
27:15
Is it?
27:16
I Jenzie, I think you're absolutely
27:18
right. I mean, here at CityM have a lot
27:20
of young colleagues and partly because
27:21
they work in a financial newspaper, but
27:23
as you say, they're all investing.
27:24
They're they're taking more risks and
27:27
suppose maybe the future's better for
27:29
them, especially if they keep reading
27:31
city. Yeah. Well, I think it's also a
27:33
sort of like we are seeing the slow
27:35
death of the property owning democracy
27:38
dream. And I think that the sort of
27:41
vision of of housing as an investment
27:44
rather than housing as a home was there
27:47
for our parents who underwent the sort
27:49
of Zatarite revolution and saw massive
27:52
gains in the value of their homes with
27:54
very little being put into it. Um, is
27:56
that earned income? Who knows? Um, but
27:59
you know, if you're under 30, that dream
28:01
seems so distant
28:03
and also frankly sort of slightly
28:06
illogical. If you're slightly more
28:08
nomadic and slightly free with your
28:10
career,
28:11
there's not that same romantic vision of
28:13
home ownership than there was. And for
28:17
for for baby boomers, Gen X and even
28:20
millennials, I think still hanker after
28:23
that sort of
28:24
I think everybody does the sense of of
28:25
owning something of having a roof over
28:28
your head and some of it's yours.
28:29
Of course. No, but I think that idea of
28:31
home is my pension. Home is their
28:33
investment. That's how my parents
28:34
certainly saw home ownership and they
28:37
were right to because it will and has
28:40
for my mom. But I think just the younger
28:43
generations are seeing opportunities
28:45
elsewhere. And I think it's not just
28:47
investment. I think that multiple
28:48
streams of revenue is I'm not going to
28:50
just focus on one salary. I'm going to
28:53
actually be savvy and make money in
28:55
multiple directions. Be it on vintage,
28:57
YouTube, and my standard salary.
29:01
Any words of advice for someone who
29:02
wants to uh Gen Zed who hopes to one day
29:05
earn 100K?
29:06
Oh, get clear on what you want. I think
29:08
get clear on what you want and then
29:09
it'll make easier to sort of actually
29:11
put aside for it. I think getting clear
29:12
on what you want um it makes purposeful
29:15
action.
29:15
Great. Well, thank you both so much.
29:17
It's been a really interesting talk. Um
29:20
and thanks for getting here as well.
#Finance