Does your household have the \u201ctwo good salaries, but still feel broke\u201d problem? You\u2019re not alone. Financial planners say they are meeting an increasing number of comparatively high-earning households who say they\u2019re still feeling the pinch.<\/p>\n
\u201cOn paper, these families are doing quite well. They are professionals with a couple of solid incomes, well-educated, in stable employment, yet they are under constant financial pressure and struggling to build any kind of momentum at all,\u201d says Michael Sherlock, head of wealth and financial planning with NFP Ireland.<\/p>\n
Soaring inflation is hitting everyone, but higher earners have more of a buffer than most. So if your household has two good salaries and is still feeling broke then what\u2019s behind it and what can you do?<\/p>\n
What is a \u2018good\u2019 salary?<\/p>\n
First of all, what\u2019s a \u201ctwo good salaries\u201d household? Some may not realise just how good their salary is compared with most other people. <\/p>\n
Average gross pay across all PAYE employees was \u20ac43,800 last year, figures from the Revenue Commissioners<\/a> show. That figure will include those working part-time. About 45 per cent of all employees are earning \u20ac30,000 or less.<\/p>\n By contrast, those who earn more than \u20ac100,000 represent 7.2 per cent of employees, but account for 29 per cent of overall gross income. <\/p>\n The number of people on this kind of money is increasing. Twelve per cent of all \u201ctaxpayer units\u201d \u2013 that\u2019s almost 420,000 individuals or jointly assessed couples \u2013 will exceed incomes of \u20ac100,000 next year<\/a>, Revenue has said.<\/p>\n Comparatively bigger salaries are the norm in some sectors. Amazon, Google, Meta, Salesforce, Microsoft and its subsidiary LinkedIn paid average annual salaries of up to \u20ac155,000 in 2024, an Irish Times analysis<\/a> of their accounts showed. <\/p>\n All these figures give some perspective on what might constitute a household with two good salaries in this State. But then there\u2019s tax<\/a> \u2013 and Ireland\u2019s progressive taxation system means that higher earners pay more. <\/p>\n [\u00a0Financial literacy: how do you score?<\/a>\u00a0]<\/p>\n Indeed, about a half of all income tax in Ireland is paid by taxpayers earning more than \u20ac100,000. About a third of all income tax comes from the smaller group earning above \u20ac150,000. So, if you are in one of these \u201cgood salaries\u201d households, you are paying more in tax than most. <\/p>\n The median disposable income for a household in Ireland is \u20ac61,666, Central Statistics Office (CSO) figures show. Disposable income is income after tax, social insurance, pension contributions and inter-household transfers are paid .<\/p>\n That equates to about \u20ac5,140 a month. If you\u2019re in that \u201cbang-in-the-middle\u201d place, know that there are as many households with less disposable income than you as there are with more. <\/p>\n To have this kind of \u201cmiddle\u201d disposable income, your household will be bringing in about \u20ac74,000 a year.<\/p>\n By contrast, the 10 per cent of households with the lowest disposable income had average nominal disposable income of about \u20ac1,316 a month, CSO figures show. <\/p>\n At the top of the scale, the 10 per cent of households with the highest disposable income had an average nominal disposable income of \u20ac3,396 a week \u2013 or \u20ac14,716 a month, the CSO says. <\/p>\n These households \u2013 it could be a married couple where both spouses are working \u2013 are bringing in roughly \u20ac280,000 a year.<\/p>\n That household will pay about \u20ac112,730 of their combined income in tax and charges, a PwC income tax calculator shows. This will leave them with disposable income of \u20ac167,275 a year, or about \u20ac13,940 a month. <\/p>\n \u201cThe person with the joint income of \u20ac100,000 can say they are really feeling the pinch and can feel they are alone,\u201d Sherlock says. That\u2019s even though they are bringing home more than most.<\/p>\n \u201cBut it can be the same feeling for the person who is earning much more, it\u2019s just at a different level,\u201d he says.<\/p>\n The impact of taxes and deductions, and whether you ramped up your lifestyle as your earnings grew, means this pinched feeling can follow you up the salary scale.<\/p>\n Lifestyle creep<\/p>\n One household can feel the pinch on a joint income of \u20ac75,000 while another can say they are feeling it on a joint income of \u20ac300,000. This can be down to lifestyle creep. <\/p>\n Lifestyle creep means spending more as you earn more. When you are working hard and earning good money, of course you want to enjoy the fruits of your labour. But if your increased income sees you increasing spending on non-essentials then you are back to square one. <\/p>\n With more money, more options hove into view. <\/p>\n \u201cThere can be a bit of keeping up with the Joneses. \u2018I want the new cars, I want to move to the bigger home\u2019, the regular holidays, all the subscriptions \u2013 these choices can come with earning extra,\u201d Sherlock says.<\/p>\n But this increased discretionary spending can really leech your disposable income. It can leave you tight at the end of the month and financially worse off overall.<\/p>\n \u201cSuddenly, you are aged 45 and you realise your fixed monthly outgoings are just too high and you have no flexibility at all,\u201d he says. \u201cYou are asking, \u2018When will I get out the other end?\u2019\u201d<\/p>\n [\u00a0How to avoid being influenced into spending your hard-earned money<\/a>\u00a0]<\/p>\n An expectation that your salary will continue to climb at the same pace as it did earlier in your career can also be misguided, he says. <\/p>\n Inflation, the cost of living<\/a> and mortgage<\/a> interest rate hikes can eat into pay rises too. <\/p>\n A lifestyle like this might feel abundant, but it can leave you short at the end of the month and be problematic for your future financial security.<\/p>\n Structure<\/p>\n If you are a household with two good incomes, but you are still feeling broke, it could be a problem with structure. <\/p>\n \u201cThe most common thing I see in families that feel they don\u2019t have enough disposable income is they just don\u2019t know where they stand,\u201d says Cian Callaghan, director of private clients at Metis Ireland.<\/p>\n If salaries are paid into two separate bank accounts for example, it can be hard to keep track.<\/p>\n \u201cSome people we meet, who are just absolutely squeezed, they are doing everything they can and they just have to keep their heads down and that\u2019s okay,\u201d Callaghan says.<\/p>\n \u201cBut for 70 to 80 per cent of people, if you just get a good structure in place, you get organised and try to have a bit of foresight with your expenditure, you probably will be able to find a little bit more disposable income.\u201d<\/p>\n Do you know how much is coming in and going out of your household each month? Do you have visibility of your total spending on fixed outgoings such as mortgage, utilities, insurances, memberships and subscriptions?<\/p>\n What about variable outgoings such as food, eating out, entertainment, clothes and grooming?<\/p>\n Getting your salaries paid into one joint account is the first step to having clarity, Callaghan says. \u201cTransfer all of your income in and have all of your expenditure coming out from that account and then start investigating from there.\u201d<\/p>\n You will know in three months what the cost of your lifestyle is, he says. <\/p>\n Look at average annual expenses, too, such as holidays, car maintenance, club memberships, children\u2019s camps and activities.<\/p>\n Running a detailed cash flow review often brings some relief, Sherlock says. \u201cMaybe you can lose some of those costs and get a little bit of breathing space for yourself,\u201d he says. \u201cYou can make choices rather than reacting on a month-to-month basis,\u201d he says. <\/p>\n Structure makes it easier to quantify spending, identify duplication, predict bills \u2013 and feel less squeezed. <\/p>\n Life stage squeeze<\/p>\n Of course, you could just be in a life-stage squeeze. Do you have small children, a clutch of teenagers under your roof or someone at college? Any of these could be the cause of your feeling of broke-ness.<\/p>\n A life-stage squeeze is one of those expected periods in the life cycle of a household when outgoings rocket.<\/p>\n \u201cThe most intense period of your life can be your 30s and early 40s,\u201d Sherlock says. \u201cYou can have a new mortgage with high repayments, even higher childcare costs, as well as trying to save for your children\u2019s education while putting a bit into your pension.<\/p>\n \u201cAll of this will pay dividends down the road, but it\u2019s having a massive impact on your disposable income right now.\u201d<\/p>\n Childcare<\/a> costs are up to \u20ac258 a week per child before subsidies in parts of Dublin, figures from Pobal for 2024 show. Working parents with two children can be forking out more than \u20ac2,000 a month, which is a big drain on after-tax income.<\/p>\n \u201cIt\u2019s like another mortgage and you will have that for several years\u2026 Even good salaries can quickly get absorbed,\u201d he says.<\/p>\n But this is a cash flow issue, not an income problem, he says. Much of this kind of broke-ness can be down to the period in your life, Callaghan says. Yes, it can feel like you are running to stand still, but keep in mind that each of these phases is time limited. <\/p>\n There isn\u2019t a fix, but there are things you can do to avoid making it worse.<\/p>\n \u201cFor people who are squeezed, if you can get through this period without incurring short-term debt, you are doing great. Things will start to turn around for you,\u201d Callaghan says.<\/p>\n This might mean a bit of hunkering down \u2013 holidays go on hold, keep driving that older car and put up with that dodgy kitchen for a bit longer.<\/p>\n \u201cJust say to yourself, \u2018This is a certain period in our lives, and we just have to make do and get through it\u2019,\u201d he says.<\/p>\n Good broke?<\/p>\n Feeling a bit broke on two good incomes can also be a good thing if your money is being siphoned into securing your financial future<\/a>.<\/p>\n \u201cWith a really good financial plan, you should feel almost a little bit broke at the end of every month because it means you\u2019re putting all of the income you have to work,\u201d Callaghan says.<\/p>\n If you haven\u2019t earmarked at least some of it for longer-term financial goals, the extra can be absorbed into spending, leaving you without much to show for it.<\/p>\n