Hi guys, in this post, I wanted to tell you about life on a 40K salary in London. Is 40K a good salary for London? Well, it totally depends on your needs and wants. However, in this post, I will do a detailed breakdown of all expenses you need to keep in mind when living in London as well as how do I spend my salary in London. What kind of lifestyle can you afford on 40K in London? You’ll find out in this post.
If you’re new to this blog, hi, I’m Liza. I’ve been living in London for over three years. Besides having this travel blog, I also work full time in marketing. On Tripsget, I mainly write about travelling, but I do also have quite a few posts about expat life in the UK. Recently I’ve been getting a lot of questions about the salary needed to live in the UK; hence I decided to write a bit more articles about this topic. If you want to access my other content about life in the UK, check my expat life category.
So here is what you can expect to read in this post:
Is London an expensive city to live in?
So let’s start with the basics: is London actually an expensive city to live in? Unfortunately, yes, London is definitely one of the most expensive cities in the world. While London, of course, has affordable housing and restaurants as well, it also has incredible prices for millionaires and billionaires. In fact, London is home to the highest number of billionaires in the entire world.
London property market is also very competitive. As the property prices have been steadily rising in the last 40 years, London became a playground for investors. There are thousands of empty homes in London, but by investors and other people who consider it as a valuable asset but don’t necessarily even want to leave more than a week per year. The prices for properties keep rising, so investors keep buying them. Now an average person can hardly buy anything in the city at all unless you use special government help schemes like Shared ownership and Help to buy.
London also has very expensive transport, especially if you live far away from the city centre. The further you are, the more expensive your commute will be. Some cities in the world have a fixed price for a Metro ticket, however in London if you end up paying quite a lot if you live in zone six or seven.
So yes, to answer the question, in a nutshell, London is expensive.
London could also be very frustrating, especially if you have high ambitions, and you want to achieve a lot. I just wrote a post about the pros and cons of living in London, and I did discuss that topic in detail, so if you’re interested in that post, make sure to check it out.
How much money does an average person need to live in London?
Another commonly asked question is how much money does an average person need to leave in London comfortably. And that, of course, depends on your needs and wants, on your ambitions and on how you’re used to spending your money.
I have a separate post about moving to London and the salary needed to live in London, where I discuss the common costs and discuss three different scenarios of living on three different salaries.
One can survive on a minimum salary in London while another person might feel that the 100K per year is also not enough to have a comfortable lifestyle in the city.
Is 40K a good salary for London? Life on a 40K salary in London
40K, in my opinion, is a very average salary in London. It’s a salary of a recent graduate from a top uni in a highly paid profession like software development consulting finance or law. It can also be a salary of someone who has 3 to 6 years of experience working in an office as a professional in Marketing, Sales, education etc. However, for some professions, it could also be on unreachable salary.
In 2019, the average salary in London was around £37k. So 40K per year is actually slightly higher than the average salary. 40K per year would give you around £2.45K per month after taxes depending on your pension contributions (they are now mandatory in the UK and you need to pay at least 3%).
What can you afford on a 40,000 salary in London?
If you’re wondering, what you can afford on a 40K salary in London, it depends on many factors, but mainly on your rental status.
If you’re planning to rent an apartment just for yourself, it might be problematic to do so, unless you find a very affordable studio for less than £1000 per month and with all the bills, you’ll probably end up paying almost £1150 per month. That would leave you with £1300 to spend on transport, savings, groceries, going out and shopping, which is okay, but you won’t have a luxurious life. Moreover, you’ll spend a lot on transport, as most probably, your studio will be in zone 3 or 4 of London.
If you’re renting with a partner (boyfriend, girlfriend, husband, wife or even best friend), it will be much easier for you. You can rent a decent 1-bedroom flat for £1400-£1600 in zones 1-3 of London, and you’ll end up paying about £850-£900 a month including all the bills. That would leave you with over £1500 to spend on everything else.
If you’re renting a room in an apartment with multiple people, depending on the location on the flat, of course (if it’s in Kensington, you’ll pay a lot), on average, you’d pay £600-£800 per month including all the bills. You’ll be left with £1700-1800 to spend on everything else, which is already a very substantial amount and you’ll have a pretty comfortable life in London.
The cheapest way to rent on £40K salary in London would be to rent a double room in a shared flat with your partner. In this case, the payments could be as low as £350-£400 a month from each of you, and you’ll have over £2000 left to spend every month. If you’re in a money-saving mode and you’re saving to buy an apartment in the future, that’s a great way to save for a deposit.
If for some reason you don’t need to pay for accommodation at all, then £40K is an amazing salary to have, as you leave all of it to yourself.
How an average person spends their 40K salary in London (millennial edition)
Let’s see how an average young person spends their 40K salary in London. Let’s imagine Chrissy, a 27-year millennial, who rents a spacious 3-bedroom flat in Holloway (Zone 2) with two other friends. The rent for the place is around £2000 and the bills for Council tax, gas, electricity and water make the price go up to £2250. Chrissy pays £750 per month for rent.
Her job is in Covent Garden, so she pays £140 per month on her unlimited travel card. If she cycled, she would have saved a lot of money over the year. She buys lunches every day, that’s £6 per day or £130 per month (counting 22 working days), and she pays for her mobile phone and gym membership around £50 per month as well. She buys groceries in Tesco, but she and her friends have a shared budget for food, so she only pays about £200 per month. She also likes going out for a few drinks at least twice per week, so she spends about £70 per week on going out (maximum £300 per month).
That leaves her with around £700 to spend on shopping, travelling and saving for her future apartment. She saves £500 per month and leaves £200 for travelling and shopping.
As you can see, Chrissy is comfortable, but she can’t afford any luxuries. She can save a bit less and splurge from time to time, but she definitely doesn’t dine in Michelin restaurants every month!
Summary of life on a 40K salary in London
As you can see from a previous example, 40K is a decent salary to live in London. However, due to high property prices, most likely, you won’t be able to afford your own place. If you have a family and kids and your partner doesn’t work, you might have tough times finding a property (unless you get social housing with a huge discount) and supporting your entire family in London. In the North, e.g. Liverpool or Newcastle, it would be much easier to do, but London is just too expensive for that.