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 here!
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? What does it take to be comfortable here?
Below, I’ll break down some of the facts and work out what you need to know.
What is a good salary in London?
There are multiple ways of determining what a good salary in London would be. Let’s first look at the stats from two different metrics – the median and the average. The table below shows the data for both metrics on an annual basis for both London and the UK.
| Region | Average | Median |
|---|---|---|
| London | £52,584 | £32,988 |
| UK | £36,768 | £27,696 |
A decent salary in London is likely to be anything beyond the median. And if your salary is more than the average, then you’re likely to be in a great spot!
Let’s dive in further.
Median Salary in London
The median salary in London is £32,988 a year (£2,749 per month), which works out to £16.92 per hour. This is about £5,300 higher than the median income for the UK of around £28,000.
The range can however vary quite significantly just within London and its surrounding regions. Within London and its boroughs, the regions with the highest median pay include Wandsworth at £42,804 of annual salary (£3,567 per month) and Westminster at £41,136 annually (£3,428 per month). Just go out a little further from the City and you can see income levels drop closer to the national median levels.
Average Salary in London
The average salary in London as of mid-2023 is £52,584 per year or £4,382 per month. This is equivalent to around £26.9 per hour. Naturally the averages will vary based on the boroughs of London.
The area comprising of Kensington, Chelsea, Hammersmith, and Fulham top the average salary range at £107,556 per year or £8,963 per month. Westminster is a close second at £105,948 per year or £8,829 per month.
Average and Median Salaries in London by Age
Aside from region, age is a big factor responsible for explaining the differences in incomes. Let’s take a look at the average salary in London by age and also the median salary in London by age.
This data is current as of mid-2023.
| Age Bucket | Average | Median |
|---|---|---|
| 1-17 years | £7,056 | £5,424 |
| 18-24 years | £22,860 | £20,580 |
| 25-34 years | £49,584 | £37,008 |
| 35-49 years | £64,020 | £38,568 |
| 50-64 years | £58,560 | £32,388 |
| 65+ | £37,164 | £22,356 |
Other Factors that Drive Salaries
In addition to the regional and age factors, salaries in London vary greatly depending on the industry, the job in question, and the employee (years in the job, level of qualifications, etc.). Naturally, jobs in certain industries like tech and finance will have a higher median pay.
If you’re looking for much more fine-grained data for your specific situation, check out our percentile income calculator for the UK. The calculator will help really dive in to the statistics by industry, region, and age. It will help you answer questions like what is the average salary in London in the Education industry? Or what is the average salary in London for a 40-year old?
If you’re looking for more comparison points, head over to my in-depth discussion about median salaries in the UK. I look at median salaries by age, region, and occupation. This should help you get an even better sense of how well your salary compares to your different peer groups.
What does it cost to live in London?
There are a few points to consider when answering this question, as your personal circumstances will likely vary compared to that of the next person!
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.
The minimum annual expenses for a single person living in London are in the £31,000 to £36,000 range. Therefore as a single person, you would need to earn around £50,000 before taxes to live comfortably and have spare left over to save and invest.
With a family consisting of two adults and two children, your minimum expenses shoot up to between £44,000 at the low end to £89,000 (if you have two very young children) at the high end!
If your family has two income earners, you could potentially get by with lower individual salaries of around £30,000 each for a combined household income of £60,000 – but that’s still tight. If you have young children, then your expenses are much higher and your corresponding income needs would be much higher.
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 a 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 £52,500 each for a combined household income exceeding £100,000.
Income Taxes
Nobody likes paying the taxman but unfortunately there’s no getting around it. It’s the biggest expense item for most people, perhaps aside from housing costs. Reducing your tax bill can help to stretch things further.
While tax evasion is illegal, you can and you should try to legally minimize your taxes. One idea for minimizing taxes legally is putting money in an ISA. The ISA allows you to avoid taxes on capital gains and dividends. Similarly, contributing money to a pension plan, such as a private pension, can help you defer your income taxes immediately. These are two very simple and powerful options that are available to everyone!
Investing your money in tax-exempt and tax-deferred accounts can go a long way to improving your financial position over time.
As a side note, if you’re curious how your income stacks up against others in the UK on an after-tax basis, please do check out our after-tax income percentile calculator.
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 with a flatmate without much difficulty, but hardly so if you have dependents.
The house price index for London in 2023 was staggering – the average cost of a property arrived at £525,000+, a slight cooling from the previous year. Compare this to the average price of a home in the North East (e.g. in Newcastle or Sunderland) – £159,000+ – which alone increased by almost 3% from 2022 – and you can see how much more you need to earn in London to support an equivalent lifestyle.
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.
The increasing cost of living
At the time of writing, inflation is slowing, but still strong. 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 median wage of £33k, 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.
Is £40k a good salary in London?
£40k is above the median salary in London, but below the average, which means while there may be a little bit of a cushion, you’ll still need to watch the pennies. You should keep in mind that if you live with a partner and have children, £40k a year alone of household income will not sustain you in the capital city.
How can I live comfortably in London on a wage of £40k?
The cost of living is quite high in London and a wage of £40k does put you at a slight disadvantage. Nevertheless, 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. Living in zones 1 or 2 might be too expensive to rent – especially if you’re living on your own.
However you don’t have to settle for a dingy one-bedroom apartment in the sticks on £40k, 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
You may work in London, but you don’t have to live here. Consider looking 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!
Before You Go…
London is the City of Dreams and anything is possible here! Our city has a high level of energy and a corresponding level of opportunity and competition that brings out the best in anyone. Hopefully this article helped you get a good sense of what it takes to live here.
However no matter how much one earns, it is crucial to plan for the long term to ensure financial stability and security. Investing wisely can help grow one’s net worth and provide a safety net for unexpected events.
By investing in stocks, bonds, or real estate, individuals can generate passive income and secure their financial future. Compound interest can turn small investments into significant wealth over time, making it an essential tool for those looking to grow their net worth.
Our whole blog is dedicated to help you get on the path of financial freedom. Feel free to browse around and read through the articles. There are plenty of investment books and podcasts that you can use as a learning resource along the way to help you reach your goal faster.
FAQs
Can you live on £80k a year in London?
£80k a year will probably allow you some comfort if you live close to the centre of London, but it still won’t grant you a bill-free lifestyle. Bump that by 25% and you’re much closer to a very comfortable standard!
What is considered a ‘happy salary’ in London and the UK?
Opinions differ on this, but many people are likely to start feeling comfortable and less worried about money if they earn around £100k a year. Again, circumstances will always vary – but this wage will likely help to support a comfortable lifestyle in the capital.
What is a good salary in London for a family?
You would need a household income of at least £60,000 to live reasonably in London. A typical family, consisting of two adults and two children, living in London has minimum expenses of around £44,000. To have this amount after taxes, the combined salaries would need to be at least £60,000.
What is the average salary in London per month?
The average salary in London is £4,382 per month.
Is £70k a good salary in London?
Yes, absolutely. If you are single, that is more than enough to cover for all your typical expenses. In fact you should even have savings left over to invest and grow your net worth! Even for a family, £70,000 is a decent household income level.
Is £100k a good salary in London?
Yes, absolutely. If you are single, that is more than enough to cover for all your typical expenses. In fact you should even have savings left over to invest and grow your net worth! Even for a family, £100,000 is a great household income level.
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