Is £40k a Good Salary in the UK?

Are you living in the UK wondering if £40k is a good salary? To some, £40k sounds like a lot, and others may think it’s not much. So let me tell you how good a salary of £40k really is.

I’ve spent over ten years working in the UK, from part-time employment during uni to graduate jobs. I’ve experienced all types of salaries so I can tell you what you’ll get for £40k.

Overall, £40k is a good salary in the UK. It is above average for most regions in the UK. In London, £40k is average. You can have a good lifestyle with this salary.

How Does £40k Compare to the Average UK Salary?

The average salary in the UK ranges between £30,000 and £42,000, depending on the region. With £42,000, London is the most expensive region. Earning £40k, your salary is close to London’s average.

Everywhere else, the average salary is markedly lower, ranging between £30,000 and £34,000, according to Statista. A salary of £40k would be a high salary.

This is how the average salary breaks down by region:

• London: £42,000
• South East: £34,000
• Scotland: £33,000
• East: £33,000
• West Midlands: £32,000
• South West: £31,000
• North West: £31,000
• Wales: £31,000
• East Midlands: £30,000
• Yorkshire: £30,000
• Northern Ireland: £30,000
• North East: £30,000

Is £40k a Good Salary in London?

The average salary in London is £42,000. Thus, £40k per year is an average salary for London. You can rent outside of the city centre and should be able to make ends meet each month.

If you want to be able to afford luxuries, £40k will not reach far in London. Living in the city is expensive, and you can find a higher quality of life elsewhere for the same salary.

Read more about what constitutes a high salary in the UK.

How Much is £40k After Tax?

After taxes, you get £30,935 per year. Per month, this would be £2578 and £595 per week.

You may get a different amount depending on extra deductions or allowances. For example, those paying back student loans see slightly less of their paycheck.

Salary	Yearly	Monthly	Weekly
Gross salary	£40,000	£3,333	£768
Income tax	£5486	£457	£106
National insurance contribution	£3579	£298	£69
Net salary	£30,935	£2578	£595

How Much Can You Afford on a £40k Salary?

1. Renting

Experts recommend not spending more than one-third of your salary on rent. A salary of £40k per year would mean you have £1100 for rent every month.

With £1100, you can afford to rent a two-bedroom flat or a small house in most areas of the UK. If you live in London, you can rent a room in a shared house in the city centre. You can also afford a studio or a small flat in Zone 3 and beyond.

Renting is expensive in London. It is nearly double what you can expect to pay in other regions of the UK. Many households in London spend much more on housing than the recommended third.

2. Buying a Property (Mortgage)

With a salary of £40k per year, you can get a mortgage of up to £180,000 in the UK. Depending on your credit score and other variables, you may get less.

Most places require a minimum deposit of 10%, meaning you can buy a property up to £200,000. Of course, you can afford a more expensive property with a higher deposit.

The average price for a detached house is £495,804 in the UK. Even in the cheaper areas of the country, you can’t afford a house.

However, you can buy a flat in most areas of the country. In London, it will be hard for you to buy unless you have a significant deposit or increase your salary to £50k per year.

3. Food

People spend on average £206 per month on food in the UK. On a salary of £40k, you should have enough to cover these costs. If you do not exceed the rent costs recommendations, you can afford to eat well even in London.

4. Other Costs

You can afford to be generous with your spending outside of London. You should have sufficient funds to go on holiday, eat out, and spend on leisure. Living in London, you can do the same, but you need to make a budget.

5. Savings

Savings are important. They cover you in an emergency, enable you to buy more expensive items, and fund important life events.

On a salary of £40k per year, you should be able to save money every month. Experts in the UK recommend stashing away 20% of your monthly income.

This would mean around £670. If you would be on a salary of £30k, you could save £500 per month.

Can You Raise a Family on £40k?

Yes, you can raise a family on a salary of £40k. In London, you need to budget and save where you can. In the other areas of the UK, you have more room and can even consider raising two children.

In the UK, you may also be entitled to child benefits to help raise your children. You can get around £1200 per year for your first child and £830 for each subsequent child.

Are You Rich if You Earn £40k per Year?

There is no clear-cut definition of what “being rich” is. However, it is typically associated with having a six-figure salary. Thus, you are not rich if you earn a salary of £40k per year.

This does not mean that you cannot be wealthy, though. Wealth measures your net worth. If you save a lot or own assets, you can be wealthy on a salary of £40k.

Tips for Living on a 40k Salary in the UK

1. Look Beyond the Captial

With a salary of £40k, you can live an average life in London. However, outside the capital, £40k is a great salary. You can afford a better home and have more money for leisure spending.

Of course, not everyone is flexible regarding their location. But if you can move, it is worth thinking about changing locations.

2. Save Money to Retire Early

Overall, £40k is enough to save money regularly. If you start investing in your 20s or 30s, you could retire from work in your 40s or 50s.

Retiring does not mean sitting at home and watching TV. It means having time for hobbies and family. The financial independence movement is already gaining in popularity. With a salary of £40k, consider joining in.

3. Start a Side Hustle

Even though £40k is already good, you can aim higher. Starting a side hustle lets you make money and gives you the fulfilment your full-time job might not give you.

Starting a side hustle does not mean you need to turn your life around. You can start small, for example, by doing freelancing work or starting a blog.

Is £40k a Good Salary in the UK? Summary

Overall, £40k per year is an above-average salary in the UK. In London, it is about average. On £40k, you can afford a decent quality of life. Buying a detached house may be challenging, but you can buy a flat outside London’s city centre.

A £40k salary reaches further outside of London. If you are a remote worker, consider moving outside London’s capital. This means you’d have more spending power.

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