March 3rd 2025.
Did you know that the average salary in the UK is £37,430 per year? That may seem like a decent income, but according to a new survey, it's not enough to be considered rich. In fact, you would need to earn at least six figures to be classified as affluent. And even then, most people who make over £100,000 before taxes don't see themselves as well off.
A recent study by HSBC revealed a significant gap in how people perceive wealth. On average, individuals underestimated their earnings compared to others by about 30 percentage points. Even those in the top 4% of earners tend to see themselves as part of the "squeezed middle," positioning themselves in the top 52% relative to the rest of the population.
Interestingly, the amount of money needed to be considered wealthy varies across different regions. In the North East of England, people believe that earning £80,000 would make them affluent, while Londoners think that £289,000 is the magic number. This is significantly lower than the average amount of £213,000 that was judged to be the threshold for wealth.
But wealth is not just about income. When asked about other signs of affluence, 51% of respondents said owning a private jet and 48% said owning a yacht. However, high earners are more likely to consider non-material factors, such as being able to retire early, frequently traveling abroad, or having investments, as more important symbols of wealth.
Surprisingly, a third of young adults aged 18 to 24 believe that having a strong work-life balance is a significant indicator of wealth. This is something that 41% of them aspire to achieve in the next two years. It goes to show that wealth is not just about material possessions, but also about having the freedom and flexibility to enjoy life.
Vicky Reynal, a financial psychotherapist, shared her insights on the survey's findings. She believes that there is a disconnect between people's high earnings and their perception of wealth. This disconnect is caused by anxieties about rising costs, inadequate savings, and the pressure of social comparison. These factors create a sense of scarcity, even when individuals have a substantial amount of wealth.
Reynal suggests that we need to redefine wealth beyond just our bank balances. Instead, we should focus on our achievements, avoid comparing ourselves to others, and prioritize financial actions that we have control over. This way, we can confidently aspire to the future we want without feeling limited by our perceived lack of wealth.
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