The global cultural city, London is one of the largest and most influential cities in the world playing a vital role in major fields like fashion, business, and finance. Being the most expensive metropolitan, measured in terms of absolute cost or general affordability, it is a hot spot for professionals and artisans and boasts strong wages.
In fact, average wages in London are the highest in the UK and are very competitive with any other European city. Yet, the cost of living is high and according to research, the minimum budget in London is as much as 50% higher than elsewhere in the country. So, the question arises; how much should you earn to have a decent life in London?
Perhaps, affordability ultimately comes down to income and lifestyle. It makes a huge difference whether you are a student or an established professional. A retiree in London faces different costs than a worker in his 30s.
Average Cost of Living in London
London is home to a huge number of restaurants, both fine-dining and casual. A nice three-course meal costs between $80 and $100 without alcohol, but you can still grab a cheeseburger combo at McDonald’s for $7. Food markets and London’s restaurants can be pricey with milk prices as high as $5.50 a gallon and some cheeses costing $6.50 per pound
While cigarettes cost about $14.25 per pack coffee prices range between $3.25 and $5 for a cappuccino. Not to forget the average pint of beer available at $6.50. Above all, housing costs are the largest expense in any budget. This is particularly true in London, where two-bedroom apartments in the city center cost a median of $2,529 per month.
Living in London as a Student
Although $800 to $950 per month is often enough for rent, four to six weeks of deposit is required to be paid by students travelling to London for schooling.
They can open bank account only after getting registered for college courses. According to a study by the London School of Hygiene & Tropical Medicine for modest living an average student needs estimated amount of $24,000 in the bank for a year in addition to the costs of tuition, travel and school supplies though $18,000 will be sufficient.
Living as a Professional in London
Unlike most of the students, professionals have to worry about costs such as insurance or school for kids. Raising a child to adulthood in London which is the most expensive city in the U.K. can cost as much as $350,000 of which about one-third is attributable to the education costs.
As per recruiting data from Guardian Jobs UK, out of the average salary of $51,200 in London, more than one-third is spent on average housing costs, and more than half is on housing, groceries and transportation. Moreover, an incredible $9,000 per year is spent by average working Londoner on the cost of peak-time train passes.
Costs in London have been increasing faster than the average salary since the financial crisis of 2008 like U.S. With little rise in taxes, the average worker earning $60,000 per year can expect to pay an effective tax rate of 18%, which is almost equal to the average of U.S.
How much should you earn to have a decent standard of living in London?
In a study by The Joseph Rowntree Foundation (JRF) it was found that since 2008 there has been a third increase in the minimum budget of most households to have a decent standard of living has risen by about a third since 2008.
According to new research income of millions of poor families in Britain need to rise by thousands of pounds just to make ends meet with a single person to earn £18,400, while working parents with two children need to earn at least £20,000 each.
With pensioners appearing to have become less frugal their budget has been aligning to those of working adults. Low-income families fall further behind a minimum income standard despite an increase in the national minimum wage. Minimum budget in London is as much as 50% higher than in the entire country with a third of Londoners earning under their required level.
Over the past ten years especially families with children have been struggling to live a decent life due to high housing, food, transport and childcare costs. Yearly low-budget holiday in the UK is seen as a basic requirement for a yearly low-budget.