Is 20k A Good Salary In The UK?

Sammie Ellard-King

I’m Sammie, a money expert and business owner passionate about helping you take control of your wallet. My mission with Up the Gains is to create a safe space to help improve your finances, cut your costs and make you feel good while doing it.

Quickfire Roundup:

While a salary of £20k is below the UK national average of £33k, it’s important to consider that this figure doesn’t take into account the varying cost of living across different regions.

In more rural areas, you may find that this salary provides a comfortable standard of living, but in a city like London, it may be more challenging to make ends meet. That being said, with some budgeting strategies, it’s still possible to live comfortably on this salary.

For instance, sticking to a monthly budget that allocates 25-35% of your salary towards rent, and opting to share an apartment, can help you achieve financial stability while still enjoying a decent quality of life.

Want to know the answer to “Is 20k a good salary in the UK?” Well, 20k is not a great salary, especially if you live in the centre of a large city.

It’s 13k below the UK average salary, which sets you quite a bit below the bar.

This low salary does limit you somewhat in terms of expenditure and the rent you can afford, but it’s not all doom and gloom and certainly not impossible to live off 20k a year.

You’ll most likely have to move to an affordable area of the country and be comfortable sharing with a flatmate.

But, wise spending could see you living comfortably on this wage. In this guide, I’ll show you how.

Is 20k a good salary UK?

20k is not the best salary for a full-time job, especially when you consider the average UK salary.

20k is below the UK national average wage, which is currently at 33k (based on median annual earnings data provided by Statista). However, this data does not accurately reflect average salaries around the country (especially in the North East, Scotland, and other areas of the UK).

The median is likely at such a high level due to the high average salary in London. In the capital, the average annual salary is nearly £42k. On the other end of the scale, the average salary of the North East is 29k.

In the North East, living expenses, rent, and bills will all be reduced relative to this average salary. So, whether or not ’20k is a good salary’ really depends on where you live.

If you were to live in a more rural area in northern England, Wales, or Scotland, you’d likely feel okay living off 20k. Especially if you are a single person and have no kids to support.

How much is 20k after tax?

20k is roughly £17,173 after tax. This figure has been calculated after taking off the following:

Income tax – £1,486
National Insurance contributions – £889.92

This equates to around £124 a month going towards tax, and £112 going towards your National Insurance. Of course, these are estimates (provided by Reed’s Tax Calculator) and your own tax situation may be slightly different.

Breaking down a 20k salary

If you take home £1,468.67 a month from your 20k salary, you’re making the following:

£677.84 bi-weekly
£338.92 per week
£67.784 per day
£8.473 per hour

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Can you live off a 20k salary?

Yes, it is possible to live off a 20k salary, as long as you keep your expenses to a minimum. If you’re sharing a flat, your gross income should safely afford rent, utilities, expenses, and some degree of luxuries.

If you live with your partner, and they too are on 20k a year, you should be able to live comfortably, within reason.

After paying for tax and utilities, you should have around £400 a month to spend on food and entertainment.

Of course, this isn’t a lot, but it’s enough money to enjoy yourself in an affordable city. Eating out and attending live shows is a lot more affordable in Manchester than it is in Oxford, for example.

How much rent can you afford on a 20k salary?

Of your 20k salary, you should only be spending around 25-35% of it on rent. Why 25-35%? Because this is the recommended amount for being able to afford rent as well as other living expenses.

The remaining 75-65% of your income can go towards living comfortably in a northern city.

But how much does this percentage actually translate to? If you’re taking home £1,431 a month after tax, it means you can spend between £357 and £500 on rent per month.

The rent price in Glasgow has risen significantly over the past 10 years, with the average price rising to £1,051 in 2022.

However, this is just an average, meaning there’ll still be plenty of property going for below £1,000. At this price, you and your partner/flatmate could easily afford a flat in this city.

Not only would this keep you living within your means, but it would also mean you’re only spending around 35% of your income on rent.

Can I buy a house on a 20k salary?

You will need to have saved money for a long while to buy a house off a 20k salary.

However, if you and your partner are both earning around 20k and meet eligibility criteria, you may be able to get a mortgage.

By eligibility criteria, I mean your credit history, your age, and how much money you have saved for a deposit.

Generally, you need at least 5% of the deposit saved up to get a mortgage. However, some mortgage brokers ask for 15% from first-time buyers.

It really depends on who you go to, where the house is located, and how much the property is worth.

That being said, we interviewed Emma from BeeMoneySavvy, who saved up for years and bought a house on a £13,000 a year salary so it is possible!

3 top tips for how to live off a 20k salary

Would you like to save up your money to put down a deposit for a house?

Instead of waiting for a pay rise, there are many ways in which someone on a minimum wage can work towards this deposit target.

Budget

Although difficult, you must manage your spending when you’re on a below-average UK salary. It’s easy to get unmotivated to save when you’re on a low wage.

Saving takes way longer than it does when on an above-average wage, so it takes you a while to hit milestones.

Still, by picking a budget and sticking to it, you’ll be able to save up enough for a deposit eventually.

Take your financial planning to the next level with our Ultimate Financial Planner – just £14.99.

Create a bulletproof budget with categories for income, expenses, debts, development and more.

Shop wisely

Simply shopping at Lidl or Aldi instead of Sainsbury’s or Asda can save you hundreds of pounds a year. You’ll be able to find everything you need in Lidl and Aldi for a fraction of the price you’d pay for it elsewhere.

If you do have to go to one of the bigger supermarket chains, make sure you’re signed up for its loyalty scheme. For example, Tesco Clubcard, Asda Rewards, and Nectar cards can all help make shopping more affordable.

Cut down on entertainment

If there’s a streaming service you don’t get a lot out of, or a monthly subscription you don’t use as much, consider removing it from your expenses.

Consider your other monthly bills, too. If you’re paying over the odds for your phone bill or Wi-Fi, check out alternative options.

FAQs

What is classed as a low salary?

A low salary in the UK can be defined in different ways, depending on various factors such as location, industry, and personal circumstances.

However, generally speaking, a salary that falls below the median income level in the UK can be considered low.

Is 20k gross salary good?

As of 2023, the UK national minimum wage for workers aged 23 and over is £10.42 per hour, which equates to around £21,630 per year if working full-time hours.

Therefore, a gross salary of £20,000 would be below the minimum wage and may not be considered good for someone working full-time.

However, it still depends on factors such as location, industry, and experience. For those starting their career or working in lower-paid industries or locations, a salary of £20,000 may still be considered good.

But for those with more experience or working in higher-paid industries or locations, a salary of £20,000 may be considered low.

Conclusion

Is 20k a good salary in the UK? It’s not great, but it’s still a reasonable amount to live on. If you’re a single person, you’d probably need a flatmate to live comfortably.

If you’re in a relationship with someone who has a full-time job, 20k is enough to live on. Saving can be difficult, but, if you’re committed, it’s possible.

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Disclaimer: Content on this page is for informational purposes and does not constitute financial advice. Always do your own research before making a financially related decision.