Have you recently been offered or maybe even landed a £70k per year job? It’s safe to say £70k is of course a good wage. However, inflation is out of control, prices are rising. How good a £70k salary is will depend on your age, location and lifestyle.
In this article, we will explore the actual value of a £70k salary in 2023 based on your age, and compare it with earnings in your local area. By examining these factors, we aim to provide a clearer perspective on how good a £70k salary is depending on your circumstances.
Earning £70k per year puts you in the top 7% of earners in the UK, making it a great salary. It provides a very good lifestyle outside of London and a comfortable lifestyle in the capital.
How Does £70k Compare To The Average UK Salary?
The UK median average salary for full-time workers is currently £33,280. Earning £70k per year is over double the average UK salary. It’s safe to say you have worked your way to a great salary. Good job!
If you live in London £70k won’t go just as far but it is still enough to live a very comfortable lifestyle in the city, while also being able to invest for retirement. If you split your rent with a roommate or partner, it will massively increase your ability to invest aggressively and potentially retire early if that is your goal.
Ultimately, earning £70k in the UK is considered good and will provide you with a very prosperous life if you are smart with your money.
What Is £70k After Tax In The UK?
If you have landed a £70k per year job, you’re doing great! However, you won’t be bringing all of that home. The government wants their cut in the form of Income Tax and National insurance.
On a £70k salary, you will be in the Higher Rate Tax band. This means you will get your free allowance of £12,570, pay 20% on income up to £50,720, and finally pay 40% tax on the remaining £19,280.
Many people think if you enter into the higher rate you will pay 40% of your total income. This is incorrect. You will only pay 40% on any income above the initial £50,720.
On a £70k salary, you will pay £15,432 in Income Tax and £5,993 in National Insurance.
This leaves you with a net take-home pay of £48,575 per year or £4,048 per month.
If you have student loan payments, they will also get taken out before your pay hits your account.
Is £70k A Good Salary For Your Age?
Looking at the average median salary for full-time workers of all age ranges, it’s safe to say that £70k is a great salary for all groups. The highest median average salary is for workers aged 40-49, coming in at £37,825 per year.
Earning £70k per year is almost double the average wage of peak earners in their 40s.
|Median Average Yearly
Ultimately, at any age £70k is a good salary and is more than enough to live a great life without having to worry about finances. If you’re in London your budget will be a little tighter but hopefully, you will benefit from more future career prospects by living there.
Is £70k A Good Salary Where You Live?
Location plays a huge role in how far your salary will go. Living in a higher average salary area usually comes with a higher cost of living. For example, the average salary in the North East is £29,521 whereas the average salary in London is £41,866.
If you are earning £70k in a lower average salary region in the UK, your £70k is great by comparison.
Earning £70k in the North East is going to give you a much better lifestyle than earning £70k in London. Pound for pound, you are going to get a much better house in the North East vs London. Someone earning £70k in the North East also has the option to keep their expenses very low and invest heavily in their retirement.
Earning £70k outside of London means you’re on a very good salary. With this income, you can enjoy a great life, go on vacations, and save a significant amount for your retirement.
Can You Live In London On £70k Per Year?
With an annual income of £70k, you can comfortably afford to live in London. This amount surpasses the average Londoner’s earnings by £28,134. It enables you to secure a decent flat, indulge in occasional dining out and entertainment, all while responsibly setting aside 20% for retirement savings.
Average wages in London are about 30% higher than in the North East. However, London’s rent prices are roughly 300% higher. This drastically cuts the disposable income of many Londoners, compared to those living in other UK regions.
You should be comfortable on £70,000 per year in London and potentially be able to save more than the recommended 20% of your income if you are frugal. We recommend living with a roommate to try and cut down on living costs.
Budget Template For £70k Salary
£70,000 is over double the Median average salary in the UK. While that’s good, it doesn’t mean you don’t have to be sensible with your spending. If you want to get wealthy and potentially retire early then having a budget and following it diligently is important.
Using a budget to track your spending is the best way to see where your money is going each month.
On a £70k per year salary, you are bringing home £4,048 per month after tax and national insurance. I have put together a rough budget template below to help you get started. However, everyone’s financial situation is different so you may need to make some adjustments.
We will follow the 50/30/20 rule. This means roughly 50% goes towards needs, 30% to living life, and 20% to savings/investing.
|Monthly Net Income
|Utilities & Insurance
|Entertainment, Clothing etc
|Saving & Investing
If you want to get into more detail with your own personal budget, I would recommend checking out our Monthly Budgeting Google sheet.
Housing On A £70k Salary
Housing costs typically represent a significant portion of our expenses in life. With a £70k salary, you should be in a comfortable position to consider buying a house once you have saved up for the deposit.
If you’re young, I personally would adopt an aggressive savings approach to enter the property market. This may require temporarily reducing expenses on vacations and luxury items for a few years. However, the long-term benefits will be substantial. By saving £800 per month, you can accumulate a deposit of £20k to £30k within 2-3 years.
When initially renting a property, it’s advisable not to aim for the largest and most expensive house within your budget. Remember that your first rental is temporary, so consider opting for a more affordable option. This allows you to allocate more funds towards savings and expedite the process of purchasing your own home.
How Much Should I Spend On Rent With A £70k Salary?
The rule of thumb for renting is that you should not spend any more than 30% of your income on rent. For example, on a £70,000 salary, you can aim to spend roughly £1200 to £1300 per month on rent.
However, if you live in a high-cost-of-living area such as London or the Southeast, you might need to stretch your housing budget slightly further. In other parts of the UK, you should be able to find a suitable house for around £1200 per month.
Another effective strategy is to consider finding a housemate or partner to share a house with. This way, you can half your rent and other housing expenses with them. You can then save aggressively towards investments or a deposit on your own property.
Can I Get A Mortgage On A £70k Salary?
Earning £70k annually in a stable job makes you eligible for a mortgage, providing an excellent opportunity to consider purchasing a house outside of London. If you are buying a property with a partner, your borrowing capacity will increase significantly compared to applying alone. To begin the process, it’s advisable to save up a deposit of 5% to 10%, with 10% being preferable if feasible.
Typically, mortgage lenders allow borrowers to borrow around 3.5x to 5x their pre-tax income.
With a yearly salary of £70k, you could potentially secure a mortgage of approximately £280,000. Assuming an interest rate of 6%, this would result in a monthly payment of £1,679 for a 30-year mortgage.
However, it’s important to note that this exceeds our recommended budget of £1300 per month. It’s essential to consider additional expenses associated with homeownership, such as insurance, council tax, and maintenance costs. If I were purchasing a house alone, I would aim for a mortgage of no more than £200,000, resulting in a monthly payment of £1,199 under the same terms.
On the other hand, if you have a partner with a full-time income, your household could comfortably manage a mortgage of £280,000, offering a more manageable monthly payment.
How To Become Financially Free On £70k A Year
If you live outside of London, you should not be struggling to live on a £70,000 per year salary. If you are, you’re making some significant financial mistakes. Here are a few fundamental personal finance rules you should follow to become financially stable.
Create A Budget
Creating a budget is the first step to becoming financially free. Knowing where your money is going each month allows you to be intentional about when you spend money.
You can use the template we provided above, to start your budget. You can make your own adjustments based on your own personal situation.
Get Out Of Debt
If you have any bad debts, your first priority should be paying them off. This might be credit card debt, car payments, personal loans, etc. With high-interest rates, these debts will make you struggle to ever get ahead financially.
Pay off these debts as fast as you can, starting with the highest interest first. Once you wipe out your debt you can start to focus on setting yourself up for financial success.
On £70k per year, you should be able to wipe out most debt quickly. If you have a car that has a £40,000 loan on it and you have no investments or emergency fund, it’s time to sell it and buy something more affordable.
Build An Emergency Fund
Once you have cleared your debts, it’s time to start securing your future. An emergency fund allows you to be prepared when things go wrong. If you get laid off at work or your car breaks down, you don’t have to stress. This money is specifically there to fix these problems.
You should aim to save 6 months of essential expenses. This is housing, food, and essential bills. For someone on a £60k salary, this is likely around £2100 per month. You should aim to save £12,600 in an emergency fund.
Keep this money in a high-interest savings account and only touch it for ACTUAL emergencies. Even if you lost your job you have plenty of time to find a new one, without having to stress out too much.
Once you have an emergency fund and have wiped out any bad debts, it’s time to start investing. You may already invest some money in a pension each month through a workplace pension scheme. If they offer a match, you should be maxing this out first.
You have a couple of options for investing. If you are planning to invest for retirement and don’t ever plan on touching the money until then, I would recommend investing in a SIPP (Self Invested Personal Pension) due to the tax relief benefits and government bonus.
I personally try to max out my stocks and shares ISA first as I like to have access to the money at any time, in case an opportunity comes up, such as buying rental property or investing back into my own business.
Either way, setting up one of these investment vehicles and investing in simple index funds is one the most popular ways to start investing.
£70k is considered a top-tier salary for any individual in the UK. It puts you in the top 7% of earners in the UK based on your pre-tax income. Living outside of London with this salary should set you up for a great financial life. In London, it won’t go quite as far due to the high cost of living but will still afford you a comfortable lifestyle.
Moreover, this income is more than enough to support a family while also saving for retirement. If you have a partner, your combined earnings will enable you to enjoy a great life.
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