What would make you feel rich? With even high earners moaning, we should pay attention: SIMON LAMBERT

What makes you rich? The wealth you have accumulated is the way we usually get the most accurate picture of affluence.

Official statistics from the ONS base household wealth on four components, property, savings and investments, physical possessions and private pension wealth – minus our debts.

In terms of how this breaks down for Great Britain, the most recent figures show property makes up 40 per cent, private pension wealth 35 per cent, savings and investments 14 per cent and physical wealth 10 per cent.

But do those things make you feel rich?

After all, it’s notoriously difficult to spend your house and you need your pension to last through retirement. So, that’s three quarters gone already.

For those in the highest echelons, undoubtedly having a lot of accumulated wealth, will make them feel flush. I imagine once you are part of the £5million-plus brigade, you must regard yourself as rich, even if you are still probably gaze enviously over your land at the neighbours' mansion.

But for most of the rest of us it’s not the house, pension pot, or Isa that matters most for day-to-day sentiment, what really counts when it comes to feeling rich is our income.

And often nibbling away at our self-worth is the feeling peers, friends and neighbours are on more than us. A common theme that runs through behavioural finance studies is our - frequently mistaken - belief others get paid more.

Our new salary and earnings calculator tells you where you really fit in and how your income stacks up for your town, your job and across the whole of the UK.

Plug in your salary, self-employment profits, or if you are retired your pension income, and you can see if you earn more or less than the typical person in your neighbourhood or profession. You can also check how much tax is eating up and find out who is earning the most and the least.

It’s a great tool to play around with – and we have also analysed the figures alongside it. As a teaser, I can tell you someone at the cusp of the higher rate tax threshold on £50,000 earns more than 76 per cent of people, while those breaking the six-figure mark on £100,000 are in the top 6 per cent of earners.

You may note that snapshot doesn’t chime with the current mood on whether people are well off.

In fact, there’s something of an epidemic of high earners complaining that while they may be on bumper salaries, they don’t feel rich.

Don't worry I'm not asking you to suddenly start welling up with emotion for the plight of Britain's hard done workers scraping by £75,000-plus salaries, but it is worth asking why this is happening.

The key, of course, is it’s not just what comes in that’s vital, it’s also what goes out.

The ONS measures disposable income as ‘the amount of money that households have available for spending and saving after direct taxes, such as income tax, national insurance and council tax, have been accounted for’.

NI has been cut in recent years, but frozen thresholds and tax traps mean there is an income tax squeeze going on and council tax is eating increasing amounts of people’s budgets.

The latest ONS stats show that median household disposable income adjusted for inflation was broadly steady over the financial year ending in 2024 but is still below 2020 levels. There's a reason why people feel poorer than they did five years ago. Effectively, they are.

It’s not just post tax income that is important though, it is also what happens next with our essential spending on everything from rent and mortgages to cars, food and commuting.

Some recent figures on discretionary income from Asda’s income tracker highlighted the pickle we are in on that.

It divided households by income quintiles aka fifths. The lowest fifth spend more than they have coming in and end up at minus £73 per week on average. Meanwhile, middle income households have just £91 per week.

The top two fifths are doing much better at £289 and £916, respectively.

However, when you consider this leftover money is what needs to be used for regular non-essential spending, enjoying life, building saving pots, investing and pensions, and setting money aside for holidays and future big spends, even £289 per week or £1,189 per month won’t go that far.

For a family with two adults and two children, it equates to each partner having just under £600 per month or £150 a week to cover their non-essential spending and still try to do some saving.

Combine the cost of doing things nowadays with also having some money to save and invest and ‘discretionary income’ is swiftly eaten up.

So, it’s hardly surprising even people on substantial salaries say they are having to be very careful about going out for dinner, spending on fun, and even think twice about takeaways.

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This judicious spending has had a big knock-on effect for hospitality and leisure businesses and retailers.

Restaurants, pubs and shops are all suffering. People are prioritising other things above spending there. For example, saying we will stick to trying to afford holidays but almost completely cut back on meals out.

Some of that is just good old-fashioned budgeting but when even higher earners are saying we can’t afford the pub or the local restaurant, it proves a massive headache for our consumer economy.

The general vibe that things are getting worse and the tax squeeze is going to get tighter is not helping.

Businesses are lining up to tell the Chancellor this. Over the past few days, we’ve had the John Lewis boss and Lord Stuart Rose chip in, but the message doesn’t appear to be getting through.

Rachel Reeves should heed what they are saying, as her Tory predecessors should have done too. We need people to feel they have more money and get a financial confidence boost, or we will forever be stuck in this rut.

So, do yourself a favour and use our salary calculator, it might tell you that you are better off than you might think.