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Is 120k a good salary in the UK?

Determining whether a salary of £120,000 is considered good in the UK depends on various factors, including your personal circumstances, lifestyle, and financial goals.

In this article, we will explore the implications of a £120k salary, considering aspects such as living costs, housing, and financial security.

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120k after tax in the UK

If you’re on the lookout for a new role or have just landed a job with a 120k salary, here’s an estimate of your wage break down after tax.

  • Income tax - £39,430
  • National insurance - £7,620
  • Take home pay - £72,950

On a salary of £120,000 your take home pay would be roughly £72,950 after tax and NI contributions. This works out at around £6,080 a month and £1,400 a week.

If you need help with your personal tax affairs, a qualified accountant can offer support.

An accountant can also help you set long-term goals and keep your finances on track.

Living costs in the UK

One of the key considerations when evaluating the adequacy of a salary is the cost of living.

Living costs can vary significantly depending on the region, lifestyle choices, and individual circumstances.

Here are some factors to consider:

1. Housing

Housing costs typically form a significant portion of monthly expenses.

In major cities and desirable areas, the cost of housing can be higher.

Renting or purchasing a property in these locations may require a larger portion of your income.

2. Utilities and bills

Expenses such as electricity, water, gas, and internet services contribute to monthly bills.

The costs can vary based on the size of the property, energy efficiency, and personal usage.

3. Transport

Commuting costs, whether by public transport or private vehicle, can impact your budget.

Fuel expenses, parking fees, and public transportation fares should be factored into your monthly expenses.

4. Groceries and household expenses

The cost of groceries and household items depends on factors such as family size, dietary preferences, and shopping habits.

Considering these factors, a salary of £120,000 provides a comfortable income that can cover the average living costs for most individuals or families in the UK.

However, it's essential to budget wisely and manage expenses effectively to maintain financial stability.

Housing and accommodation 

With a salary of £120k, you have various housing options available to you.

The choice between renting and buying a property depends on your long-term plans and financial goals:

1. Renting

Renting allows for flexibility and lower upfront costs. However, rental prices can be high in certain areas, particularly in cities with a high demand for housing.

2. Buying

With a higher salary, you may have more flexibility to consider purchasing a property.

Buying a home offers the potential for long-term stability and investment growth.

It's important to carefully evaluate your financial situation, consider mortgage affordability, and assess the housing market before making a decision.

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Financial considerations and saving potential

Earning a salary of £120,000 provides a solid foundation for financial security and future planning.

Here are some key considerations:

1. Debt management

A higher income can facilitate faster debt repayment and help you become debt-free more quickly.

Prioritise paying off any outstanding debts, such as student loans or credit card balances, to improve your financial position.

2. Savings and investments

A higher salary enables you to save and invest more for the future.

It's recommended to build an emergency fund to cover unexpected expenses and prioritise long-term investments, such as retirement accounts and other investment vehicles.

3. Retirement planning

With a higher income, you have the potential to save more for retirement, ensuring a comfortable lifestyle in your later years.

Consider contributing to pension plans and explore other retirement savings options to maximise your savings and take advantage of potential tax benefits.

4. Lifestyle and enjoyment

While it's important to plan for the future, don't forget to allocate some of your income for leisure activities, hobbies, and experiences that bring joy to your life.

Career progression and future earnings

When evaluating the adequacy of a 120k salary, it's important to consider your career progression and potential for future earnings.

Many individuals aspire to progress in their careers, take on additional responsibilities, or seek new opportunities for professional growth.

As you advance further in your career, your salary could still increase, providing the potential for improved financial well-being.

It's worth noting that while salary is an essential factor, job satisfaction, work-life balance, and personal fulfillment are equally important aspects to consider when assessing the overall value of a position.

Conclusion - is 120k a good salary?

Earning a salary of £120,000 in the UK provides a substantial income that can support a comfortable lifestyle, cover living costs, and facilitate financial security.

However, it's crucial to manage your finances wisely, budget effectively, and prioritise saving and investing for the future.

By assessing your personal circumstances, setting financial goals, and seeking professional advice when needed, you can make the most of your salary and work towards achieving long-term financial stability and prosperity.

View related salaries: 100k | 120k150k | 200k

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About the author
Our team of writers, who have decades of experience writing about personal finance, including investing, retirement and pensions, are here to help you find out what you must know about life’s biggest financial decisions.