What Is A Good Salary in London?

Fancy moving to London? In order to get the most out of living in the capital a good salary in London is at least £50,000.

With its incredible views, things to do, restaurants, museums, culture and job prospects, it’s understandable that London has a population of over 8million. But those people really do pay the price for laying down roots in the capital.

London is the fourth most expensive city in the world, behind only New York, Hong Kong and Geneva. .

It’s certainly the most expensive place to the live in the UK, and so for that reason a decent salary in London is going to look a bit different compared to a good salary in the UK.

Plus there’s a lot more to consider when placing a number on the ideal salary.

Families can expect much higher costs for example. And your spending habits may influence whether £50,000 is actually enough to fulfil what you consider to be a “good” lifestyle in London.

The median UK salary is £27,756, while the median salary in London is £36,749. Quite a difference!

But we’re not just talking about an average salary. A “good” salary should mean you can cover rent or a mortgage, other essential monthly bills and have money leftover for fun, without accruing debt.

Let’s take a closer look at what you need to earn to live well in the capital.

What is a good salary in London

Thanks to the sky high living costs in the capital I would want to earn at least £50,000 to live well in London. This places you well above the median salary in London of £37k.

You’ll take home around £3,100 a month.

It’s a stretch to cover the average rental cost of £2,500 a month in the capital and have enough leftover – but if you’re living in a house share, a below average rental or with a partner who’s also earning then it becomes manageable.

So technically that would be a “good” salary by comparison to majority of other earners in London, but what if you want to live alone or have a family?

Having a number of dependents changes this – as well as other influences like how many of you in your household are earning.

If you want to live truly comfortably in London then you’re going to need a little more.

What is a good salary to live comfortably in London?

A good salary to live comfortably in London would be £60,000 – assuming you are living on your own or with a partner or roommate contributing to the cost of the bills.

As soon as you have dependents to support that’s going to eat into your disposable income and make a “comfortable” lifestyle in London a little trickier.

On this salary you will take home £3,575 which should be enough to cover the cost of renting a one-bed apartment – depending on the area of London you choose. It should also leave you with enough cash to spend on going out and holidays.

What influences how much money you need to live well in London

Which area of London you choose
Number of dependents
Size of your home
Number of earners in your home
What you spend on food
Any debts
How much you spend on going out

What is a good salary in London for a family?

A good salary in London for a family of four is at least £65,000.

This would mean you bring home £3,811 a month. That should cover rent or a mortgage as well as any childcare costs you may have.

However with the soaring cost of food and energy bills in recent years you are unlikely to have a huge amount of money leftover at the end of every month.

Ideally you would want that £60,000 to be a combined income, as an individual earning over £50,000 needs to pay a High Income Child Benefit Charge.

If between the two of you your salaries combine to £60,000 (or even get to £50k each making you £100k in total) then you get to keep claiming weekly child benefit and keep the full amount.

Taking into account the higher costs of living – and that with a family you will likely have to shell out for a larger and more expensive property – then a comfortable salary for a family living in London would be closer to £75,000.

Cost of living in London

What is considered a “good” salary to live in London is very much influenced by the costs of living in the capital.

As explained already, it’s the most expensive place to live in the UK and one of the most expensive cities in the world.

You can expect your minimum monthly expenses to be £2,200 as a single person, but this soars to an average of £3,800 for a family of four. That’s much more the UK average household bills.

Your key monthly expenses that will influence how much you need to earn include:

Mortgage – An average mortgage payment is £1,355. The average cost of a house in London is £724,509 (well above the UK average £287546) https://www.rightmove.co.uk/house-prices-in-london.html

Rent – The average monthly rent in London is £2,500, according to Rightmove. As you can see from this Mayor of London map, private rents are vastly more expensive in central London compared to outer boroughs where you can find the average rent is £1,500 a month.

Council tax – The average band D bill for London is £1,696. Surprisingly your council tax bill is likely to be cheaper in London compared to some other areas of the UK. Analysis by The Times found council tax bills are 20% higher in the north of England than London.

Other essential bills – Your gas, electricity and water bills are likely to cost over £200 a month. Plus you’ll need to consider a TV Licence and broadband costs too, which are going to be another £50 a month.

Childcare – Like so many other things, childcare is more expensive in London. The price for 25 hours a week childcare for children aged under two in inner London is £183.56. https://www.standard.co.uk/news/london/london-childcare-costs-highest-in-country-nursery-fees-childminders-b1059916.html

Going out – A night out in London will cost you far more in the capital compared to other UK cities such as Glasgow and Manchester.

Other expenses – Want to enjoy exploring the capital? You’ll likely need to use the Underground and buses. An Oyster card costs £156.30 a month for Zone 1 and 2.

Taking this into account, it’s easy to see how living in London will cost you far more per month than the UK average household bills of £1,500.

How can you afford to live in London?

Putting all of this information together it’s hopefully given you an idea of the costs involved in living in London.

A huge influence on whether you can afford to live in London will be which area you want to live in coupled with your number of dependents and general financial situation.

Before you set off for the big city, consider these things.

Your take home pay

How much do you take home after tax and what are your existing commitments to spending.

For example do you have car finance to pay off or any debts that need to be paid every month?

Once you have worked this out you know how much money you have to put towards rent or a mortgage and the other essential bills.

Where you plan to move to

If you’re moving into the capital to rent you may pay more per month than if you’re moving in with a hefty deposit to put down on buying your own home.

Cost of childcare

If you have kids then research the cost of nurseries or childminders in the area of London you have your eye on.

The costs can vary by borough, but overall cost more in London than elsewhere in the country.

To give you an idea, in Berkshire, just outside London, I paid over £1,800 a month for two kids under three to attend nursery three days a week. Ouch.

There are childcare schemes available to make the costs more manageable and the government plans to extend these to younger children as well.

But it’s important to fully research what the monthly cost of your childcare will be.

Set a budget

When it comes to other monthly expenditure you should try to shop around and get the best prices you can for things like food, TV services and broadband.

Making a regular meal plan and cooking cheaper family meals can help to keep you within budget every month.

Try using an app like Plum to analyse your spending.