What is a Good Salary in London?

London is the financial hub of the UK. It’s also a hot spot for entertainment, work, education, and culture. So, it’s no wonder so many people want to live there! 

However, since it is such a desirable place to live, it also happens to be pretty expensive. This leads many of us to wonder, what is a good salary in London? Are you likely to live comfortably if you earn £40,000 a year, for example?

Below, I’ll break down some of the facts and work out what you need to know.

What is a good salary in London? 

Nowadays, a decent salary in London is likely to be anything beyond £41,000 a year. This is the average wage of an individual working in the city today, which on its own is around £8,000 per year higher than the average for the rest of the UK!

However, as is the case with all big cities, salaries in London vary greatly depending on the industry, the job in question, and the employee (age, years in the job, level of qualifications, etc.). 

You should also keep in mind that if you live with a partner and even have children, £40k a year alone of household income will not sustain you in the capital city.

Could I live in London with my salary? 

There are a few points to consider when answering this question, as your personal circumstances will likely vary compared to the next person’s!

The cost of living in London is, as you’d expect, significantly higher than the rest of the UK as it’s in proximity to some of the best-paid jobs in the country. It’s also home to immense international investment and development, and offers a dense variety of opportunities.

For context, the minimum annual expenses for a single person living in London are in the £31,000 to £36,000 range. With a family consisting of two adults and two children, your minimum expenses shoot up to between £41,000 to £49,000.

Therefore as a single person, you would need to earn close to £50,000 before taxes to live comfortably. If you have a family and two income earners, you could potentially sneak by with lower individual salaries of around £30,000 each, for a combined household income of £60,000 – but that’s still tight.

Here are a few more factors that may impact whether or not you can afford to live in London on your salary:

Your dependents and spouse’s wages

Be it children, a partner, or other loved ones who need your financial support, you will need to take them into consideration before moving to London! £4,000 per month is not the same for a single person with no dependents as it is for someone with two children and a partner to consider.

Ideally, supporting dependents in London city (and even its boroughs) will require a dual income. Even the wage of £60,000 (before taxes) for the household, as discussed earlier, will be tight as it leaves no room for any savings or emergencies. However, you will likely be most comfortable when both partners earn closer to the average of £41,000 each for a combined household income of £82,000.

The increasing cost of living

At the time of writing, inflation’s growth is slowing, but still continuing. That means the cost of everyday items, travel, groceries and energy will all continue getting more expensive as time moves on.

Unfortunately, wages are not yet increasing at the same rate as inflation. This means that, even on a wage of £40k, you may still see a disparity between what you bring home and what you can afford to live by in the capital.

There’s no real way of telling when or how the UK will exit the crisis. However, it’s better to move to London with more than you’d expect to need, than to risk it and end up in debt should inflation persist.

Housing choices

It’s safe to say that a three-bedroom home close to the heart of the city will cost much more to run than a one-bedroom flat in London’s boroughs. That said, even bedsit prices are expensive compared to elsewhere in the UK, and again, much of this is to do with convenience in being so close to London’s centre.

Carefully consider your needs if you’re eyeing a move to London. A £50k salary as an individual may get you a two-bedroom flat without much difficulty, but hardly so if you have dependents.

The house price index for London in 2022 was staggering – the average cost of a property arrived at £523,000+, an increase of 4.8% from the previous year. Compare this to the average price of a home in the North East (e.g. in Newcastle or Sunderland) – £154,000+ – which alone increased by almost 9% from 2021 to 2022.

The London rents map shows you how much you can expect to pay across the capital and beyond if you just want to rent. The median London rent is likely to be anywhere above £1,700 each month – getting less expensive when you move out towards areas such Sutton, Orpington or Southall, for example.

How can I live comfortably in London on a wage of £41k?

£41k is the average wage for Londoners right now, which means while there may be a little bit of a cushion, you’ll still need to watch the pennies. Here are a few ways you can make that money travel a bit further.

Be wise on property decisions

As mentioned above, it’s wise to look for a property that meets your immediate needs in London if you’re set on growing your income.

You don’t have to settle for a dingy one-bedroom apartment in the sticks on £41k, but at the same time, you can’t expect a house with two spare rooms in the suburbs.

Invest, instead, in a savings account and/or a stock portfolio and, while growing your income, build a nest egg and look to move gradually over time. Your forever home doesn’t have to arrive today!

Shop around

When you first move to London, it may be tempting to try out the different brands and hot spots that you’re simply not used to elsewhere. However, doing so will immediately drain your resources.

Plan ahead, instead, with a monthly budget. Look into public transport, too, instead of succumbing to the congestion charge. Grab an Oyster card and take the tube if you have to! Comfortable travel and fancy meals will come – but consider your needs first.

Be open to moving and commuting

If you work in London but don’t have to live there, look at cheaper opportunities out of the city. Are there areas within an hour’s train commute that can save you money in the short term?

By living a commutable distance away, you can still build on opportunities in London while saving up money to live closer to the capital. Moving instantly to London on a job opportunity is a common mistake for some people!

FAQs