High cost of keeping up appearances

Apr 23 2008 by Marlene Shalton, Western Mail

ARE many of us living beyond our means? Apparently, 15 million wannabe middle- class Brits rack up £35bn of debt in an effort to “keep up appearances”.

Deluded Brits are living the middle- class fantasy according to the moneysupermarket.com Index of Social Aspiration.

We’re all middle class now – or so we think. How many Brits who classify themselves as middle class are actually working class, by financial standing?

Fifteen million wannabe middle-class Brits are in denial of their true working class status, and instead are turning to debt to finance their lifestyles.

And in their attempt to keep up with the upper middle class, middle class wannabes are supplementing their income with a combination of secured and unsecured loans totalling nearly £35bn.

Around 2.7 million social climbers are using unsecured debt to finance private schools, second homes and household staff – at an average of £13,000 of debt per person.

There are, it seems, only 1.7 million true middle class left – with the greatest concentration in Leeds.

More worryingly, the survey by price comparison website moneysupermarket.com revealed that more than six million of these wannabe middle class households bring in less than £15,000 a year – well below the national average.

This clash of earning power and social class means people are relying on credit cards and bank loans to finance their monthly spending – while many use secured credit.

People aspiring to be middle class actually display many of the same financial and lifestyle characteristics as those people claiming to be working class.

Rent and mortgage payments were found to be virtually the same at £366 for a working class household compared to £334 for those claiming to be middle class.

Average income between the two sectors also varied little (£23,000 for the working class and £33,000 for middle class) but by contrast the upper middle class were found to earn a great deal more with mean earnings of almost £52,000 a year.

The upper middle class are also spending twice as much as the wannabe middle class on rent and mortgages (£668 compared to £334), and more than twice as much on the most visible sign of wealth – going out and entertaining (£206 compared to £89).

Unsurprisingly this group is also now where you can find the outward signs of what was once associated with a typical middle-class lifestyle.

For example the true middle class are far more likely to have domestic staff – 34% of the true middle class have a cleaner, and 20% have a gardener – compared with 13% and 11% respectively from those declaring they’re middle class and funding these luxuries with borrowed money.

Richard Mason, managing director of Insurance and Home Services at moneysupermarket.com, said: “With the credit crunch taking hold and the housing market faltering it’s worrying to see that so many people are spending and borrowing beyond their means to try to keep up with the lifestyles of others.

“Consumers need to take immediate stock of their household budgets to identify the pressure points and seek money saving opportunities.”

By comparing the disposable income and the amount of people calling themselves middle class in 10 cities around the UK, the index shows that Cardiff is home to the most aspirational social climbers.

Residents of the Welsh capital believe they are middle class, in spite of the fact they earn less money and are only able to afford the luxuries of a middle-class lifestyle by borrowing.

n Marlene Shalton is a director of independent financial advisers Chambers Morgan James