Around one in four people earning a six-figure salary say they are living pay cheque to pay cheque, according to a survey.
Nine in 10 (90 per cent) of those who said they were living pay cheque to pay cheque attributed it to cost-of-living increases, while 38 per cent blamed rising mortgage payments. And 29 per cent said debt repayments were causing them problems, while 11per cent pointed to car finance costs.
More than two-thirds (69 per cent), said their pay had failed to match inflation, while 11 per cent said their salary increase had exceeded inflation and the remaining 20 per cent said their pay had kept pace with rising costs.
Those aged under 40 were particularly likely to say they were living from month to month.
Just under 30 per cent of those aged 40 and under said they were living pay cheque to pay cheque, which fell to 26 per cent for those over 40 and 16 per cent for those aged 60 and above. Older adults may be less likely to have dependent children and more likely to have paid off their mortgage.
High earners in Wales were the most likely to say they were living pay cheque to pay cheque, at a third (33 per cent), while those in Yorkshire and the Humber were least likely, at a fifth (20 per cent).
In London, where house prices are often higher than elsewhere in the UK, 28 per cent of high earners said they were struggling to live within their means.
Carla Morris, a financial planner at RBC Brewin Dolphin, said: “The findings of our survey underline just how much the cost-of-living crisis has affected every section of society in the UK.
“Even people who are among the highest earners in the country are living pay cheque to pay cheque, with almost all of them citing the rising cost of living as one of the main reasons for being in that position. Wages are also failing to keep pace with inflation for the majority of people, even in this income bracket, which means they are struggling to offset the impact of higher costs.”
Figures released this week showed Consumer Prices Index (CPI) inflation slowed to 4.6 per cent in October, from 6.7 per cent in September.
Prime Minister Rishi Sunak said it meant he had met his target of halving inflation to below 5.4 per cent by the end of the year.
But inflation remains above the Bank of England’s two per cent target, and economists pointed out that the lower energy price cap helped drive the sharp drop last month.
Nearly half (47 per cent) of high earners surveyed for RBC Brewin Dolphin expect their financial situation to remain the same in 2024.
A fifth (19 per cent) believe it will get worse, with around a third (34 per cent) expecting to be better off. Older people aged 60 and over were particularly likely to be downbeat about their financial situation next year, with 82% saying they believe it will either stay the same or be worse.
Ms Morris added: “While high earners aged 60 and over are perhaps not feeling the pinch as much as their younger counterparts at the moment, they are considerably more pessimistic about their financial situations next year.
“Rising costs will gradually begin to eat away at their income and, although the state pension will be protected by the triple-lock, other savings and the income they provide may be struggling in the current environment.
“However, many of the people in this age group will also likely have been through these types of high inflation and high-interest periods before. They might not have the earning capacity they once had, but will have more experience than many of their younger counterparts in how to financially navigate them.”
The survey of nearly 1,300 high earners was carried out for RBC Brewin Dolphin by FindOutNow in September 2023.
Press Association – Vicky Shaw