Wealth by numbers
Britons are richer than they think. Helen Warwick takes a closer look at the UK's 'working wealthy'So what does it take to be rich these days? Is it just feeling comfortable or should your assets be flourishing? When is the time to stop pinching pennies and start enjoying the benefits of your savings? Hiscox's recent report, Just who are today's 'Working Wealthy'? examined the top ten per cent of earners in the UK and found that many of them are much richer than they realise.
There is clearly a veil of modesty shrouding this segment of the population, dubbed the 'working wealthy'. The research found that, despite three-quarters of professional workers earning well above the national average, they don't consider themselves to be rich.
Austyn Tusler, Head of Hiscox's Art and Private Client division, says: "We do a fantastic job of helping our customers who need specialist insurance to protect the assets they've worked hard to accumulate. But what about those people who don't even know they may need specialist insurance cover? We wanted to reveal that many of those people are actually much wealthier than they think and expose the resulting lack of appropriate cover."
Thinking in global terms, we Brits are way ahead in the rich list. In fact, most of us are considered to be rich. Consider this: anyone whose annual income surpasses £462 can be classed as an above-average earner and those pulling in more than £13,650 a year are in the world's top ten per cent of earners. These figures are all relative, of course, so what defines a top earner in the UK, and who are they?
Kings of understatement
The report found that the UK’s top ten per cent of earners are more affluent than they give themselves credit for. This is despite the fact that four in ten professional workers indulge in two or more foreign holidays a year and nearly a third of them enjoy more than £20,000 of annual disposable household income after forking out for bills. But the truth is that they are more concerned with having a steady income than spending their cash on swimming pools.
Austyn explains: "More than 90 per cent of these people wouldn’t dream of thinking of themselves as wealthy."
"By underestimating their wealth, the working wealthy are vulnerable to risk as they won’t be ensuring their assets are protected properly."
- 90%
- The percentage of the working wealthy who don't think of themselves as rich
Home comforts
It’s often a person's home that mirrors their wealth, whether it's the location or the opulence of the property. In 2007, there were more than 88,000 homes worth more than £1 million in England and Wales. Compare this with five years previously, when there were just 33,000. This means that almost 1,000 new property millionaires were created every month during that period. But you won't be surprised to know that London accounted for 58 per cent of million-pound property sales in the past year and 44 per cent of people with a salary of more than £50,000 a year live in London or the South East.
- 88,000
- The number of homes in England and Wales that are worth more than £1m
Little luxuries
Compared with average earners, the working wealthy spend proportionally more on cars, home entertainment, white goods, restaurants and hotels. They also funnel a lot more of their income towards their health, mortgages and private education.
But the working wealthy don't shell out on just anything. They spend proportionally less of their money than the average earner on food, cigarettes, alcohol and communication. Many also keep a vigilant eye on the value of things: a large proportion of self-made millionaires report that they prefer high street shops to designer labels and 40 per cent say they spend less than £500 a year on clothing, while a third claim to spend less than £60 a week on food shopping.
- 40%
- of the UK's working wealthy spend less than £500 a year on clothing
Steve Langan, UK Managing Director at Hiscox, says: "Being wealthy doesn’t mean we stop being down-to-earth or lose touch with the value of things. We've worked and saved hard to buy the possessions that we hold dear. But there's a serious point in here: we need to recognise that we may have slightly more sophisticated financial and insurance needs and make sure that they are catered for."
