How far does a household income over £100,000 get you?

A couple who live in the Home Counties, with a combined household income of £145,000, give us a sneak peek at how they spend their money.

Having a six-figure household income puts them in the top 5% of earners in the UK, according to the Institute of Fiscal Studies. But there's a big difference between being rich and feeling wealthy. Many top earners may find their income is eaten up by high housing costs, childcare costs and taxes.

We're not suggesting that the couple in the case study are struggling – rather, it's a handy illustration of how much it can cost to raise a family.

This couple's joint salary is almost £130,000. We look at how far that might go and the practical changes they've made to feel less stretched so that they can prepare for the future.

How do our costs stack up?

Annual earnings:

Earner 1: £85,000 (employed)

Earner 2: £60,000 (self-employed through limited company)

Total household income: £145,000

Monthly outgoings

Pension contributions:

• Earner 1: £567 a month through salary sacrifice (excludes employer contribution)
• Earner 2: £833 a month

Private family health insurance (through earner 1's employer): £106 (this is a taxable benefit, deducted monthly)

Monthly take-home pay after deductions, expenses and tax:

Earner 1: £4,555.57

Earner 2: £3,705.65

Total: £8,261.22

What's the largest monthly expense for this family?

Monthly bills:

• Childcare: (nursery for 4.5 days and after-school clubs three days a week) approximately £750 (£1,000 before tax relief (Opens in new window))
• Mortgage: £1,662
• Food: £550
• Eating out: approximately £80
• Energy: £153
• Council tax: £213
• Water and sewage: £59
• Life insurance: £114.16
• Income protection: £0
• Internet: £41
• Two phones with SIM-only deals: £24
• Commuting (train): £108.80
• Petrol: £38 (one car that's driven a few times a month)
• Children’s extra-curricular classes: £60
• Entertainment subscriptions: £37.17
• Contact lenses: £20

Total: £3,910.13

Annual costs:

• Home insurance: £587.64
• TV licence: £169.50
• Car insurance: £457
• Car servicing: £1,150
• Clothes: around £3,000

Total £5,364.14 or £447.01 monthly

Monthly total: £3,910.13 + £447.01: £4,357.14

Cost-of-living case study: what a sensible approach to money could look like

We're a married couple, both aged 36, with two children who are five and almost four. We're fortunate to have a very good income, but we are still careful with money.

As the self-employed worker of the two, I'd describe us as being sensible with money. We look for ways to save and keep tabs on our monthly spending. For example, we file our own tax returns, rather than pay an accountant, and record our income and outgoings on a spreadsheet.

We've also prepared for the unexpected. We have at least six months’ worth of savings – around £50,000 – to cover us in case of an emergency. We saved this amount over several years from our salaries, if ever one of us is out of work.

We're not extravagant. We rarely go out and haven't been abroad for four years – partly because we have two very young children. We had one holiday in the UK this year: a week at Centre Parcs that cost us around £3,000.

Our biggest monthly expense is our mortgage, around £1,600 a month for a four-bedroom detached house in the Home Counties. We are three years into a five-year fixed-rate deal, and our interest rate is around 2.2%, so we won’t have to worry about our mortgage payments increasing for another 18 months.

We're so thankful we went for the five-year rather than a two-year fixed-rate option, as our monthly bill would currently be much more due to higher interest rates. We are due to remortgage in October 2026.

And if interest rates are 6% when we come to remortgage, our monthly mortgage payments would likely jump to £2,900, reducing our ability to save each month.

The good news for us is that our childcare bill will be much lower by then, as both children will be at school. We'll probably always rely on some childcare in the form of after-school clubs, at least until the children are older, but the overall cost should be below £250 a month.

Our childcare bill is currently around £1,000, down from £2,200 at its peak when we were paying nursery fees for two.

We wouldn’t be able to afford private school, as the term fees for two children would be £2,400 a month (including VAT) before any extras such as uniforms, clubs or trips.

To help ensure financial security, we’re bringing in more income, in part thanks to the fact that I’m self-employed. My husband also recently got a new job and a pay rise.

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