money and people
Money

Do you earn more than your parents?

I’d like to delve into family and money. The dynamics of being in a position where you earn more than your parents. Does it change things? Moreover, is each subsequent generation meant to do better than their parents? Is this social mobility expected progress or an unusual situation?

What influences children?

family fruitIt fascinates me that we are all brought up differently. And in the early years, we basically are influenced completely by our parents.  As young children we adopt their mannerisms and values automatically. We keep their company, and people who they have vetted as suitable companions, such as family, friends, and caregivers. It’s usually only at school that we start to get exposure to outside influences, both good and bad.

My parents work history

Both my parents are civil servants, working for the government. They both started at the bottom, and progressed within the framework of civil service roles. My dad started as an apprentice and worked his way slowly up. He progressed from blue collar roles to a more white collar, but still a physical role. From the pennies he got paid as an apprentice, over the years as he took on more senior roles his salary increased, and he topped out around age 50. I’m not sure of the exact details of his final salary, but it was around the £60-70k mark. On the other hand my mum was a graduate, a teacher, starting on a training contract and doing many decades as a classroom teacher, before progressing up the ranks. She ended up as a head teacher for many years, topping out about a similar salary to my Dad.

Growing up I thought this was normal, that everyone should work for one employer for life, and progress upwards slowly but steadily. Clearly both my parents valued steady jobs and incomes above all else. Diving into this, this may have been driven by their respective childhoods. Both of their families were in semi-precarious situations. In my particular my mum’s father was a live in gardener. So when he lost his job, they all had to move. And my Dad was basically raised by a single father and his older sisters, and money was tight. His Dad also worked a labouring job, and times were very tight when he did not have work. So, my parents paths have diverged from their respective parents, in a positive way. They both achieved social mobility, and moved out from the working class into the middle class.

My work history

As I’ve mentioned before, I’ve worked hard and been lucky enough to increase my income significantly in my thirties. In my twenties, I was nothing spectacular career or salary wise. However once I got my act together and overcome my personal barriers, detailed in this post if you are interested, I managed to increase my income to over £100k. This has taken a lot of effort, and involved a lot of self reflection.  I’ve been drive to achieve and maintain this, as a good income is the main key to my FIRE dreams. Hence in my thirties I started to eam more than my parents.

Follow your parents

elephant followSo, as you can see I have embraced some of my parents influence, but rejected some of their values. In particular I’ve rejected working for the government, and staying with one employer – they both think I am a terrible job hopper! And that the lack of stability should worry me. But I have mimicked their approach of honing your craft, putting in my time and progressing up the ranks. This was one the key skills I learnt from them, that puts me in a really privileged position. The idea of working away and putting in the effort to strive for a promotion is normalised for me.

Choices I made to earn more

But what differentiates my choices from theirs? How do you end up earning more than your parents? I feel taking risk is the big differentiator. I’m much happier to take big risks and live by the outcome than my parents are. Failure doesn’t phase me, I expect it and modify my approach and try again. I don’t value or prize stability at all, which they find very strange. Instead I value a job that engages me and challenges me, and really allows me to add value. Different strokes for different folks?

Benefits of my parents choices

Whenever you mention long term government employees in the UK the gold plated pension comes to mind. Yes, my parents both have this absolutely fabulous gold plated pension. And as they are final salary pension schemes, they both benefited increasing their salaries to significant amount in their last decade working. I know I will never get as good a guaranteed income as their pensions, even if the market does awesome. They both played it well here, I credit them for this. They are both now retired, enjoying their fabulous gold plated pensions.

Benefits of my choice

However, as I’ve shunned stability, I’ve given myself much more freedom to learn and grow. In the corporate world, one has to move much quicker and learn the concept of value. I’m able to articulate what the benefits of hiring me are, and am able to put my skills to user really quickly – I love to hit the ground running. Not to mention that this approach has allowed me to earn more.

Does this change things?

swans familyI also want to consider the time-point when my income was greater than my parents.  When I first started making good money, I was a bit concerned it was a temporary thing, so didn’t think of my income relative to others. But once it had been over a year, I realised that I was now the highest earner in the family, and that I made more than both of my parents. And given their imminent retirements, for the rest of my working career was I also going to be the bigger earner? I wonder how it should impact the dynamic? After I started working, I’ve always took the approach of splitting things with them. Occasionally they would pay for items, occasionally I would. Much like with good friends. However should this differ when my income increased? We are generally not show your love with money type people. A great value I got from my parents, I thank them a lot for this. We’ve always liked frugal type activities, going for walks etc. And we don’t tend to do spendy things together at all. Or do extravagant gifts.

Does it make them proud?

I don’t think it does, as my parents are not money motivated people. They certainly value money in the sense of doing financially well enough to look after yourself. But they don’t value excess, especially not in financial terms. As children I remember the phrase “more money than sense” being uttered a lot.  However I know they must have also gone through the stage of realising they earned more than their parents as well. It has got me thinking, should you always expect to earn more than your parents, excluding inflation obviously? Is social mobility still alive today? I’d say that my parents definitely exhibited social mobility and moved up a class, but as for me? There is not a real class to move up into, but I’m happily accept being promoted into the liberal elite class if that’s possible?

Nature vs Nurture

As an aside to conclude: I also have a brother. And he is following their path much more closely than me. He works for the government. And is slowly rising in his career. And shows no signs of deviating from this path anytime soon. Does this prove it is nature then? That I had an inherent desire for change and he doesn’t? We went to the same schools and had roughly the same influences, so I’d guess so. I predict he is going to follow my parents model exactly, and earn roughly the same as our parents.

Do you earn more than your parents?

  • What are your thoughts on this topic?
  • Is your approach similar to your parents?
  • Thoughts on social mobility?

33 comments on “Do you earn more than your parents?

  1. Are these “gold plated” pensions all they are cracked up to be? How much does your annual investment income compare to your parents pension? My main concern about the teachers pension scheme is that only a third of it is passed on to a spouse, and then all benefits expire with their death. 100% of private investments can be passed from generation to generation, which can then be added to. But your mum is part of the final salary TPS which was a very generous scheme, it’s career average now.

    1. That’s a good question, and I think we class them as gold plated as they are inflation linked, final salary and were initially non contributory. Yes, they got them for free, on top of generous salaries. Given they were non contributory for most of their working lives, it’s hard to compare with an investment based defined contribution scheme. I believe the teachers pension scheme is/was also very sexist, the spousal benefits were only available to men!

      1. Were they non-contributory at first! Wow! The deal has definitely changed! So my dad was a teacher and his pension is currently higher than my salary, which is incredible! I also think it is sexist that a man working for his whole life can accrue a full teachers pension but his wife/partner who takes a career break to raise their family (which is commonly what happens) gets left with very little pension when her husband dies.

        1. Yeah, the non contributory part made them extra special. And the risk free ness appeals to their risk adverse natures.

          The sexism is deeper and direct. A man would get a spouses pension and a woman wouldn’t. Even if they got paid the same and worked the same number of years. Nothing to do with career breaks of having kids, that’s another jungle.

          And inheritance is not a thing they are concerned about, I grew up in a kinda socialist place, giving money to kids is not a thing. And especially not a pension. It’s more about the greater good than protecting your own.

      2. Were they non-contributory at first! Wow! The deal has definitely changed! So my dad was a teacher and his pension is currently higher than my salary, which is incredible! I also think it is sexist that a man working for his whole life can accrue a full teachers pension but his wife/partner who takes a career break to raise their family (which is commonly what happens) gets left with very only a third of the pension when her husband dies.

    1. That’s really interesting to hear Angela, it’s great to hear all perspective and combinations of children/adults in families. Your parents and hubies parents sound like me in the risk/reward way.

  2. The only thing I have in common with my parents is wanting independence in whatever I do, including my job.
    As far as money, I don’t think my parents ever realized how well I was doing and I never shared. It didn’t really matter.

    1. That’s so cool Caroline that you have parents that want independence as well, a cool and worthy attribute. And that both you and your parents believe that knowing incomes doesn’t really matter.

  3. My husband and I don’t make as much as our respective parents make (or made). That’s because we each have a physician parent. But we are far better with money than our parents — they lived up to the doctors-bad-with-money stereotype — and we have more time with our kids, so I think we’re happy with the tradeoff.

    1. Hi Freida, thanks for commenting. Sounds like you have made the perfect choices for your family, and that’s amazing that you are much better with the money than your parents.

  4. Very interesting to read about your parents’ history.

    I don’t make as much as my parents did or do – their retirement income from their properties is far more than what I currently earn.

    I had a working class upbringing in the West, money was tight but we were never hungry. They on the other hand were poor in the East and as kids, lived off the land (my mum and her aunt, in between going to school, worked in the paddy fields with my grandmother, selling what they reaped!). If we go back further, my grandmother lived in poverty as during Word War II, the invading Japanese army left very little for them to eat, even stealing the family ox (to eat) which ploughed their field!

    I went to university, whereas my parents were only schooled up to the age of 16, two years before Mum got married… Note however it was my Mum who pushed us to go for further education, my Dad would have been quite happy for us to go straight to work.

    Where I’m not like my Mum is that I don’t/didn’t have her ambition, which in her case, was to come to the UK to ‘find her fortune’, have kids and then retire early!

    Where I’m like my Dad, is that I prefer to be content and be satisfied with ‘enough’, than go for the big salary. I’ve never had the urge to do this, despite numerous opportunities to do so, nor have I been jealous of friends or siblings who do earn big money. I stayed with the same company for over 20 years because I was happy there, liked the work, made great friends and it was enough for me. However, like your parents, I’ll also have a final salary pension to draw upon, so in that sense, it was worth staying there.I get that @Quitting Teaching doesn’t see these as ‘gold plated’ due to the inheritance issue, but they’re gold plated enough for university lecturers to go on strike over because DC pensions are a ‘riskier’ substitute!

    Incidentally, in a turn of events, my siblings went to Hong Kong to ‘find their fortunes’ and all of them earn way more than my parents did/do. I guess I’m the ‘under-achiever’ in the family but I can’t say that’s ever bothered me.

    1. Thanks for commenting Weenie, your family story is fascinating. I love how everyone in the FIRE game is in a different situation, there is not one category everyone easily fits in.

      And kudos on the final salary pension, that’s an amazing draw. A guaranteed index linked income with no risk at all.

      And the inheritance thing is an interesting point. My parents don’t consider it necessary to leave money to kids, why would they? Their parents had no money, and neither did theirs. And there is a strong feeling that giving kids money for an headstart in unethical.

  5. My parents were both blue collar workers, one of which spent much of his life between jobs. One has a college degree from when I was an adult and the other does not. I’m a white collar manager level employee with a masters degree making more without my wife’s income then both combined. Social mobility is definitely alive and well if your willing to persue it. Honestly I learned more about not following my families financial path then following it. It became my motivation.

    1. Thanks commenting and sharing FullTimeFinance, you are certainly proof that social mobility is alive and kicking, sounds like you did it via education and conscious choices, very impressive.

    1. Hi, thanks for reading and commenting. That’s interesting, that you think social mobility is easier in the US than the UK – I know a lot pf people think the opposite.

      1. I think it’s easier to start a business or get a high paying job through education (doctor, engineer, banker, etc) in the US than in the UK, but I could be wrong. For example, is it easy to become a barrister in London? From what I’ve read, it doesn’t seem like many people from poor backgrounds make that step.

  6. I have no idea how much my parents earn. They are terrible with money and have a boom/bust approach to earning and spending. They are run a law firm so some years and good and others are awful. At 65 and one year shy, you’d think that they had a plan and could retire soon but they’ve always said “lawyers never stop working” and I find their lifestyle rather stressful.

    We grew up middle class in terms of experience but since they are ridiculously generous in a society with no social welfare structure, it felt like we were poor a lot of my childhood. I also earn money in a stronger currency than they ever have. I don’t know that I’ve started earning more / ever will but I’m certainly more stable / will not be working at 65.

    1. Hi Luxthrift, thanks for commenting. That’s interesting that you’ve also chosen a different path than your parents, that’s kinda scary they are planning to keep on working forever.

  7. My parents are both entrepreneurs. Believe it or not, although retired, at the height of their work lives, they made more than me by far. Although people think my net worth is high, I estimate my parents are about double.

  8. This is a very interesting topic that I hadn’t really thought of before. In my case, I learned from the mistakes and successes of my parents and so I feel I’ve gotten to where I am faster than they did. However, I also think you must consider financial factors other than income alone. Many people have a high income but their net worth is low because of high debt.

    1. Hi Tawnya, thanks for stopping by and commenting. I agree. you have to consider other factors, but given everyone’s parents have a few decades on them, they also generally have less debt and higher net worths etc.

  9. Like Weenie I am the “underachiever” in my family. Both parents earned far more than I ever did, indeed their pensions are more than I earn. They also both retired early-ish (58). My brothers earn significantly more than me yet I am the one gunning for early retirement. It will be a leanFIRE as I will never earn enough for fatFIRE but then in order to do this I have lived a lean life anyway.

    Oh and I am one of those civil servants with a final salary (now career average) pension although not earning anywhere near what your parents did. I am forever grateful for this pension and NEVER complain about government pay caps or changes to the pension. I know how good it is in comparison to what the private sector has to offer, I could never replicate it via a SIPP or personal pension on my earnings.

    1. Hi Tuppeny, that’s so cool that despite not being the top earner, you are striving to retire earlier than your family. LeanFIRE is cool, some of the fatFIRE numbers I see scare me – I don’t know how I could spend that much money.

      I think my parents were the last generation that got grandfathered into the final salary pension, everyone else got moved to the career average. But I think you are allowed to complain about the pay caps, they have been horrendous for some people – no pay rise for years, despite inflation spiralling. You are more than entitled to complain.

  10. I don’t earn anywhere near what my dad does He was a chief exec so in the end probably earn 200k plus maybe more . I was always taught the value of money as he was self made and came from a v poor background but he’s alot more balanced than me about living for today He’s still managed to retire at 62 with 2m in a pension and a million of property despite an expensive divorce from my mum and losing money on property in both Spain and florida. That said I did learn from him that your pension is your best investment and ive always contributed Not to the level you have but at 37 i have 150k in my pension. I don’t know anyone else in my social group that has that much and i only started earning good money 45k plus now 90k about 5 years ago so more than half was built on a wage of 30k or less . The downside is i do want a certain standard of living now probably influenced from my parents hence why my saving isn’t over 50% but i save way more than any one else i know. I am definitely better with money than my dad but worry about it far more than he does . Hes always telling me with 60k in savings and a six figure pension i should be enjoying life. I probably do need ot be more balanced (he says commenting on a finance blog at 6.50am on a sunday 😂😂)

    1. Your Dad sounds awesome – telling you to chill is hilarious! I love how he has done what worked well for him, working till 62 and enjoying spending his money. And he taught you about money, but never told you how much he made – a very British characteristic.

      And spookily we sound quite similar income profile wise – I never made big bucks until I was 32, 5 years ago…. my pre age 30 pension is separate and at ~£45k, my post 30 pension is just over £200k. Which goes to show, even when I didn’t earn a lot, putting the funds in a pension mattered.

      At the moment I want freedom more than I want to spend money, but I always reserve the right to come back and work a few more years if I change my mind! I tell people I am saving for a long sabbatical at the moment, and noone questions it – I’m calling it a pre-planned mid life crisis.

      1. That’s interesting so you save more outside a pension than in from your numbers ? Ive used my pension to save the tax but trying to increase my non pension savings now Its currently 60k but i want to finish the house (new kitchen ) and i want to get rid if my silly lease car next year so that will take alot of that. Although I can’t quite bring myself to spend the money atm so delaying lol

        Feels like two steps forward one step back but trying to take dads advice and live a bit more for today as well

        1. Yeah, I have to save more outside the pension as I’ve maxed out the allowances – but it also makes sense as I plan to FIRE at 40, and will need access to funds before I can get the pension cash out.

          Kitchens can be expensive – I bought a house with such an old kitchen – pretty sure it was older than me. So had to replace it, and also got to remodel which it needed as well. But I did have to live with an ugly weird kitchen for a few years. How bad is your kitchen?

          1. Its fine apart from the dishwasher needs replacing (first world problems) and just not what i want.hence why I’m putting it off for now

          2. I can’t imagine life without a dishwasher………..

            My mum finally redid her 20+-year-old kitchen when the cooker broke, but she was ok with the dated kitchen until then. She had that cooker in the previous house too!

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