To save money at the grocery store, Seb Kouyoujmian searches stores with yellow labels reduced items at your local supermarket. He will only buy shoes if he absolutely needs them. Takeaway is considered a luxury. This might come as a surprise once you learn that Kouyoujmian is an architect with a salary of over £100,000. But, speaking from the cramped one-bedroom apartment he owns in north London, he says his quality of life is not what one might expect. given his paycheck. “I’m earning more than ever,” the 38-year-old told me. “But I feel poorer than ever.”

This may seem ridiculous to the 96 per cent of the population who generally earn significantly less than £100,000 a year. In fact, the average salary in the UK is around £36,000, according to the Office for National Statistics. For those aged 18 to 21, it’s closer to £24,000. And this varies by region, and gets worse outside of London.

Yet the fact that the four percent are feeling the pinch is a symptom of what Dr. Mike Savage, professor of sociology at the London School of Economics and Political Science, calls “intensified” class divisions. In other words, as the wealthy among us struggle to keep up with inflation and the cost of living, their struggles highlight how bad things are for the rest of us. Dr Savage helped deliver the largest study of social class in the UK in modern history and says the situation is urgent.

“The people who are really struggling with the cost of living and inflationary pressures are those who are poorly paid, living in precarious situations and juggling debt,” he says. “The fear that average or even high incomes will be eroded by inflation and the freezing of tax thresholds is a sign of the feeling of insecurity felt by a large number of people.”

High earners are well aware of how their laments may be perceived. “It seems so privileged,” Kouyoujmian says. “I’m not looking for sympathy, but I’m also trying to make it clear that I don’t feel comfortable either.”

Lea Turner, who grew up on a council estate and left school at 16 with no education, agrees. The 39-year-old doesn’t fit the typical trajectory of a six-figure earner, having overcome the challenges of being a single parent on benefits and going on to build a multi-million pound business – a network digital business. owners called The HoLT – during the pandemic.

“I feel very lucky to be comfortable, because it’s so much more than the vast majority of Brits can say,” she says. “But it’s not so affordable that I can rest on my laurels. I still need to maintain this level, otherwise the things I have in my life right now will no longer be affordable.

Seb Kouyoujmian

Things like his house. After years of saving and planning his finances, Turner bought a house in Manchester. This year she found her mortgage had increased by £300 a month. “If the price goes up even more, I might end up having to sell,” she says.

The cumulative effects of inflation have played a significant role, with the Office for National Statistics reporting that a salary of £100,000 in 2000 is worth the equivalent of £53,600 in September 2024 in terms of value and earnings power. purchase. The Institute for Fiscal Studies also reports that inflation rates for food, for example, increased by an average of 26.6 percent in just over two years, and that the effect on households varied depending on depending on income. The highest income households experienced inflation rates 7.7 percent lower than those in the bottom income percentile of households – and so-called “cheapflation” means that the lowest income products expensive ones experienced the strongest increases. This is because the increasing cost of everything means that everyone is getting less bang for their buck.

Although Turner has experienced the precariousness of living a modest life as a sole earner, she says earning £100,000 “certainly doesn’t make you rich”. For example, she expected to be able to easily afford a new kitchen, but says that’s not the case. “I have to buy and sell clothes on Vinted. I go on an affordable vacation once a year, to the same places I’ve already traveled to. It’s not crazy luxury. I don’t travel first class. We don’t party on yachts or stay in five-star hotels or anything. I don’t buy designer clothes for myself or my son. There are some things in my life that have improved, but not much.

Kouyoujmian and Turner are known as HENRY – or “High Earner Not Rich Yet” – a term coined by Shawn Tully in a 2003 article for Fortune magazine, and used to describe people who earn a high salary but don’t have much left after taxes, education, housing, family, and saving for retirement. Kouyoujmian and Turner understand that they are better off than, say, a service worker with a much lower salary. But while one bill increasing can be a nuisance for relatively wealthy people, all bills rising at once can put them in a similar situation to people earning much less.

Kouyoujmian saw his mortgage and energy bills double and the price of his groceries triple. He says the cumulative cost of all these increases is straining resources. As a landlord and tenant, he says he recently received a bill for £21,000, while a cancer scare prompted him to seek private medical care, which has also increased. Turner, meanwhile, says her expenses easily amount to £4,000 to £5,000 a month. She pays £1,000 a month in private school fees for her son. This, combined with emergencies or vacations, leaves him with little.

For Kouyoujmian, an additional concern concerns his pension. He currently pays £1,100 a month towards his pension, but as he only started earning six figures three years ago, he has calculated that he will have to pay £3,000 a month to retire at the age of 68 years old with income of £60,000. “As an architect, I can’t afford my own services,” he says. “It’s a dream for me to be able to afford someone like me.”

He adds that his quality of life and overall work-life balance are worse than when he was earning half his current salary. He even dabbled in furniture making in his spare time. “I have to work 50 to 70 hours a week and I always feel like I’m treading water,” he says. “I know this sounds ridiculous, but I’m paranoid about my retirement, especially if I look at friends, elderly family members, or neighbors and see how they are or aren’t doing. not.”

Investment expert Victoria Harris says the structure of the tax system means those earning just above six figures feel worst hit. She calls this the “60 per cent tax trap”, a name given to the removal of the personal tax allowance for those earning just above £100,000 and below £125,000. A quirk of tax rules means they can end up paying up to 62 percent in tax.

In addition to the tax burden, a higher salary can lead to “lifestyle creep,” meaning that as you earn more, the more you spend, opting for more expensive versions of the same things you would have previously purchased at a lower cost.

Harris, who runs The Curve, a company which advises women on their finances, said: “One of our members recently said to me: ‘Vic, I fought so hard to get over the £100,000 limit, only to find myself spending even more outside of my budget. than when I had a lower income. » She believes the challenges can be overcome through better financial planning. Harris advises “building confidence in salary negotiations,” “creating investment strategies,” and “developing a support network” of other high-earners.

However, Dr Savage believes tax increases and rising inflation are systemic problems and a reflection of strains in the economy. “Increasingly, amid pressures on the welfare state, individuals must rely on their private assets to pay for routine medical and other services,” he explains. “Class divisions are intensifying as divisions deepen between the rich and those juggling debts. »

If much of their experience sounds familiar, that’s the point. These four percent are not living as luxuriously as expected, and that should be cause for concern. Because if someone with a big salary can’t afford to renovate their kitchen or eat out whenever they want, how can everyone else do it?