How do your finances compare to average?

0:01You know what I love, Damo? Things that save me time. You don't have YouTube Premium, mate, so I just don't believe that. Granted, I'll give you that one. However, I've got one for you. A great time saver in personal finance is Money Week magazine. They spend a lot of time distilling the biggest stories in personal finance down into consumable chunks, so you don't have to scroll and scroll. They give practical tips on savings, investments, pensions, the UK economy, the global economy. It's like your five a day, but for finance. If you want to give Money Week a try, you can get six issues in print and the app absolutely free by visiting moneyweek.com forward slash money.

0:34After your trial, you'll save an extra£5 a quarter on the subscription, which is exclusive to Making Money listeners. And that's moneyweek.com forward slash money. But there's a link in the description if you just want to click that. Do you earn more than the average? When we're talking about the wealth gap. Gender pay gap. Ethnicity pay gap. Tax bills. I recently did a video about how much people are paid in the UK from full-time work on my YouTube channel. And it got a lot of people talking. But I really just touched the surface. So today, I wanted to go behind the data and look deeper into the issues that this brings up.

1:06People like Warren Buffett, he credits a lot of his wealth to winning the Ovarian Lottery. How we got here. Discrimination isn't always in individual people. Sometimes it's in the rules. And what you can do about it. When it comes to getting promotion pay rises, that's the best advice that I've received. Just before we start this one, I just want to introduce the episode because we're going to be talking about some pretty interesting topics today. Some of them that I personally don't have experience in. Some of the other people around this table may have or may not. But I think it's important to caveat that we just want to have a broad discussion that looks at the data on averages and where people sit with their incomes in the UK.

1:46Because without having those conversations, people don't know. And I think it's empowering to have that information. So hopefully people can take something out of this. and we can also try to represent the people here that don't have a voice around this table. Like I said, we'll go through the averages and I've got the data here and then we'll just try and have a roundtable conversation. Today, we're joined by Timmy Merriman-Johnson, who is the founder of a financial education company, Mr. Money Jar, and also a National Numeracy Ambassador. Thank you for joining us, mate. Yeah, thank you for having me.

2:17Pleasure. I couldn't think of a better voice in the personal finance space to have this conversation because I always think you find a way to really nail the human side of the discussion. And I've said to you that to him personally as well. Yeah, thank you. It was really good meeting you for the first time at the event we spoke at and great to meet you too, Tamir. We're like name twins almost. Yeah, I know, TNT. Is your name Yoruba? Yeah. Tamir, it means God is behind me. Mine is God is always with me. I got no idea what mine means. Mine's the son of the devil. Which is pretty appropriate. Pretty appropriate.

2:50Is your dad called Lucifer by the chance? Yeah, this is going to go well, isn't it? Okay, so let's just start, first of all, the big number. So these figures recently came out. There's going to be new figures in a few months. So just bear that in mind when you're listening to it. But this is based on salary or PAYE earnings. So the median monthly pay is£2 ,260. That's an increase of 6.7 % compared to the same time last year. that means that average income is about 27 ,000 pounds in the UK. I mean, how do you feel about that number? Yeah, obviously that's the overall stat. Like there'll be like regional variances.

3:31We know that in Wandsworth, for example, that figures 3.5K. And then in Leicester. 1 ,900 around. Yeah, 1.9K. So I think the overall number is important. But what's even more important than that is like what you can actually buy with your money. So we'll need to take into account people's biggest costs like their rental mortgage, their bills, their groceries and stuff and how much disposable income they have left over. And I think a great thing in the video that you posted, Damien, that I think is like a quarter of a million views now on YouTube. Yeah. And you got a comment from YouTube as well.

4:05Yeah, yeah, yeah. That's huge. Something you said in that video that really stayed with me is that like you could move, what was it, a hundred miles? A hundred miles down the road. And actually be in like one of the cheapest parts of the country. And so I've thought for a long time that the UK was very London-centric, and I've recently moved from London to Brighton. And I think it's important to think about where you can get the biggest bang for your buck and not just the buck. That's my thought. Yeah, it's spot on because how expensive is Wandsworth to live in? I don't know. I imagine it's not cheap to buy a house in Wandsworth.

4:38It's quite a - It's a nice area. Yeah, it's a well-to-do area. If the difference between Leicester and Wandsworth is 100 miles, and you're sat in Leicester right now, what's stopping those people making that move? Well, I guess you don't just live somewhere because of how much money you can earn there. There'll be like family and friends and networks and that sort of thing. And I don't have any kids, but I imagine like having a family would make that upheaval more difficult as well, particularly if you've got things like schools to consider and so on. What I'm hoping is that in the long term with the increased appetite for working from home and stuff and with the high-speed rail projects and so on, that the UK is genuinely more of a connected place to live in and that you can move somewhere else, but work remotely and increase your wage, for example.

5:25I was definitely going to say something just like that. I mean, when I graduated from my MBA in Manchester, the best time I had was graduating, having a job that paid me a London salary, but I was living in Manchester. So my rent was so cheap compared to what it is in London. So I think working remotely, you can do that. Like you could be living in Leicester or you could be living in Wandsworth, but your drug company's in Leicester, but you need to make sure that the salary is higher where you're getting paid than where you live. Yeah. So if you're earning a set amount of money every month, yeah, moving to an area of the UK that's cheaper is a way to get more bang for your buck.

5:59But then there's also three other things, I think. There's upskilling, there's promotions and pay rises, and then there's moving to a different job. Because as you also said in your video, there's like 30 million PAYE earners. So that's like almost half the country, right? So in terms of upskilling, and this is something that I wish that I'd taken more seriously when I was younger and earlier on in my career. If you can pay an amount of money to learn a skill that leaves you better off than if you hadn't had paid that money, then that's something worth learning. And this is what Warren Buffett actually calls intrinsic value analysis.

6:33So I'll give you an example. If you do a video editing course, say, and you pay a grand to do that. That's what you call the book value of that course. That's the amount that it's cost you to do that. But if you then go on to make a thousand pounds a month every month from video editing, that is the intrinsic value of that course that you've taken. And that will last you a lifetime. I think public speaking and learning how to code or learning a different language are also other skills that fall into this remit, which is if you can train yourself in how to do something, upskill yourself, then you can increase your earnings potential potentially unlimited down the line.

7:06Yeah. And you can even just step into a different sector that has a higher average pay. So, like I said in the video, be HR within finance, not within arts because finance has a higher median pay. So you'll probably be doing similar work and getting paid more for it. Yeah. One thing is with the skills. So one thing I did wrong early in my career was I was a career salesman. And I almost assumed that when I left the job, I was starting at the floor again. and I probably walked into businesses and then accepted less than I should have got. You know, I could have gone in and gone, I've been selling for X amount of years in a different field, but it was almost like, oh, I don't know this field.

7:42So I'm on the bottom of the ladder and then I just had to drag my way up again. How do people know how to value skills like that? You know, that don't come with a hard number on them. Yeah, it's true. I mean, I'm not sure if I'm the best person to answer that question. This guy knows how to follow my tag. Just because I sucked in the corporate world. I've only ever been promoted twice. And the most I've ever earned is 34K in my life. And I knew, I run my own business now, but I just knew for the long term, I'm not going to, I just forever. I worked for some good companies, had good colleagues and good managers and stuff, but I just couldn't play the game, couldn't do the politics, couldn't get promoted.

8:21So my trajectory was always going to be on earning my own money. I feel a lot safer now as an entrepreneur and as a content creator. A lot of people don't feel like that. Look, it's really weird, but I feel a lot safer because I know that I can just, you know, promote myself, sell a bit more, make a bit more money. But when I was working in a job, it was like there's a secret code you needed to know to ask for the pay rise or like get the promotion. So it'd be interesting to hear you. Definitely. I mean, I just say because I've spent my most of my career in sales. So, I mean, I sold everything.

8:53Everything. Commodity, not everything.

8:59commodities it's a different podcast the london podcast commodities carbon credits fine investment wine like red wine to invest with uh cryptocurrency and i'm in venture capital so it's really how you see your skills and you value them but not everyone knows how to translate that into a cv yeah speaking in terms of outcomes rather than in terms of responsibilities. Exactly. I looked after this team. Well, what did that team create? How much money did they bring in? After a few years, I learned sales is transferable. And if you've got a proven track record, that's better than most salespeople. So I had like a book of, it's like a book of achievement.

9:37Remember the achievement award? Yeah, no certificates. Yeah, I just used to print off months where it was like, Damien is the top biller. Yeah, all that stuff. So when it comes to getting promotion pay rises, that's the best advice that I've received, which is that if you can get your line manager, the people that are in charge of you to buy into your progress, you almost go over the next six to 12 months. I wanna go up a level. They'll know what you're talking about when you say that and what things do I need to achieve within the firm to be paid more? And then you keep that kind of Damien's book of achievements and then you work towards them.

10:08So by the time you return to them, a year down the line, half year down the line, you've already done all the things and then they have no choice but to promote you. But then to the earlier point about like, your company just might not have the funds. You might be in the industry which has an earning ceiling. The biggest pay jumps that I've seen when I've spoken to people in the coaching capacity or when I spoke to former colleagues during my corporate life was when people moved jobs. So you just need to be prepared to do that. That's when you're going to get the biggest jump. I really like that.

10:37Speaking to you, boss, it's the sales line of if I, will you? So then if they say yes, it's like, well, I've delivered that, so you've got to buy. So we always used to try and get those kinds of lines and in sales conversations, but have the same conversation with your boss of like, you know, what do I need to do to move up a step? Really quantify it because I think a lot of people are just passengers in businesses and they might think if I work harder than everyone else, I'll get promoted. And then they see other people moving up the ladder and it's like, why is that happening? And they don't realize that businesses don't want to really promote people.

11:06They just want them to work as hard as possible. It's the people who push that get moved. Yeah, yeah. And I just didn't know how to do that for being transparent. Why do you want to pay someone more if you could pay them the same? Exactly. So it's not in their interest to give you more money. You've got to fight for that money. I definitely think - Even if you deserve it, you still need to fight for it and argue for it. I think this leads nicely into the conversation around gender then within pay. So I just want to say again, I want this to be an open discussion. So I want to throw out counter arguments that doesn't necessarily reflect the opinions here.

11:36I just want us to be able to have the conversation that many people might not feel comfortable having. I've got some stats around gender and pay. So in 1997, it was 27.5 % for all. Today, or in 2020, sorry, 2022, it was 14.9%. So there's been an improvement. The pay gap between men and women. Yeah. It gets worse the higher you earn, which I think is quite interesting. So, you know, more skilled or higher paid men tend to be paid higher for that. But it has come down over that time, which is a positive. Yeah. But it's still quite significant. Yeah. There's a lot of people that deny it's even there still though.

12:15Yeah. I mean, there's just some, you can put stats in front of some people and if they don't want to believe it, they don't want to believe it. But I did a video on this around March time this year. So the current gender pay gap is around 15%. So essentially for every one pound a man earns, and this is all workers, a woman will earn 85p. That's significant as well when you think about it. But I think that the biggest misconception is that like if you're a woman, any woman in any job earning anywhere that the man sitting next to you is earning like 15 % more than you. That's not the case. What we actually see is pretty much gender pay parity up until the age of 30.

12:52And then at 30, the gap widens. And this is what the Institute for Fiscal Studies is called, the motherhood penalty. Because as we also know, the age of a first-time mom for the first time is like 31 in this country. And this is the period of a woman's life where she is most likely to take time out of work and give caregiving responsibilities and so on um so i think it's about it's not entirely this like if there was a fix for it i'm sure we would have done that but i think it's about reducing the burden from mums to be the caregivers of children and to give dads more of a say like you've both got kids right how much time did you get to spend with your newborns when they were two weeks it was two weeks and then you can't afford to no and then as a salesman it's like you don't sell, you don't eat.

13:37So you get back in. I'm lucky because I work from home, but like it's hard because I'm on a Zoom call. But you're still working. Yeah, he wants to come on every Zoom call. He wants to bang on my mouth. I smash the keys. He wants to say hi to whoever's on the call. So it's hard. It's hard. And like you're trying to talk numbers. You're trying to have a serious conversation. And he's like, ah, and he's like dribbling on me and like slamming the keys. And then he closes the window and I'm like, oh, sorry, one second, I can't see you. And I've got to open the window. Turns you into a cat. Yeah.

14:04if we're saying it's not I don't know what burden it is I promise you I'm not a cat this is just a filter I promise so let's say gender pay gap is actually a pregnant woman pay gap or there's like a bias it's a big chunk of it yeah a big chunk of it is because of that there's obviously prejudice in there but like a large portion of it is this and if we could level the playing field in terms of paternity rights and the view that the woman is the primary caregiver that might help that but how do you combat the fact that some women want to be the primary caregiver yeah absolutely um one of the most important jobs that we do as a species is the birthing and the rearing of the next generation and money is an insanely useful invention um by by human beings um and it's gotten us to where we are today but there are some things that money simply just isn't able to value at the moment.

15:02So when you look at things like caregiving work, ONS data published, I think in like 2014, found that if you were to tot up all of the unpaid work that is done in this country, primarily by women, it would come to 1.1 trillion or 56 % of all GDP. This is all the housework, all the looking after the children and so on. and we just don't know. Our market can't capture that value, but if you don't raise a child right, that's something that can go enormously left in the economy and stuff. So we need to almost evolve the current iteration of capitalism. Yeah. My partner was having a conversation with me the other day and she said, in the past, we almost valued motherhood more than we do today because the conversation was, the man goes out and work and I'll raise the children because those are equal in this household.

15:51you know and those are two really very hard jobs yeah where it's now woman goes out be a boss get a career but also go home and part-time do all the women's got two jobs yeah exactly yeah so it's almost harder today than it was back then you know my partner says she's the babysitter the cleaner the cook and like six other jobs and like six other jobs and she's also a therapist so she's going back to work in like january so it's like i don't think i could do all of that and go to work So it is quite a daunting task. Yeah, and I think as well, because I've spent some time poking around on gov.uk, looking at the maternity policies of different countries in Europe.

16:28And it seems like what we've done in the UK is we have almost outsourced the quality of your maternity or paternity leave to the company that you work for. So if you work for a big company, you probably have, you know, full salary for X number of months and kind of all sorts of benefits there. but if you work in like a smaller company i used to work for a charity you may not see the same like benefits you get the statutory benefits yeah yeah you might you might get um statutory benefits but if you look over in like scandinavia in sweden women are like getting i think it's like full or close to close to full pay for like a year to to have a baby i will admit that that's something that's a lot easier to do the smaller your population is but it just shows like what the country values, it's like if you have a kid, the state's going to back you because that child's going to grow up and become like a future taxpayer and a bunch of other things.

17:22Yeah. So because people are making decisions not to have kids because of the burdens around their home. I saw there was a thing on Netflix that was like, you know, why do women get paid less? And they were talking about this caregiving point and they looked at examples and they drew Iceland up as a country where there's equal paternity rights on a use it or lose it basis. So the men are incentivized to take the time off because why wouldn't you? Stay with your baby. Yeah, I'm going to get six months here. So they take it. And then through that period, a lot of men realize, oh, you know what? I'll stay at home.

17:53You go back to work because you earn more than me. You're better at it. Your career trajectory is better. But it just doesn't seem that way here, does it? In the UK, we don't. You don't hear about paternity leave in the UK. I mean, some places I'm sure they offer it, right? yeah but it'll be it'll be company by company yeah that's what i mean some companies will offer but you don't hear you and even just culturally even if we know that that's wrong that's still the culture right isn't it like the that the man goes back and if we flip this from the company's perspective how do we ask companies especially small ones to shoulder that burden how how can they do that so this is the point that i was making about um like the scandinavian countries I think the question is, if we stop having kids in two generations, there's just no more people, right?

18:41There's just squirrels and pigeons or whoever takes over from us after that. So it's like if someone has a child and they have to take out time from work to raise that child and look after them, especially in those, I've not had a kid, but from what I can sense from my friends who have, is that those first three to six months are just very peak and you just need as much. support as possible, whose responsibility is it to help those families through that period of time, particularly for your first child? Is it the responsibility of the company that you work for at that period of time? Or should we say that there's a minimum level of support that you will get from the state as a taxpayer, as a citizen of the country?

19:21That's what I think the question is. Yeah, I think you're right. Because if we look at what a company structure exists to do, it's to maximize shareholder value. And there is no shareholder value in paying out people to have babies you know they're incentivized to go the other way and yeah what you get over time is well larry works more than jill larry's here larry doesn't go and they move on you gotta keep the lights on you gotta sell things you gotta provide products you gotta provide services but if if we just said you know what you're a citizen of this country you pay tax so when you get to this and that life milestone we're gonna back you i personally would pay a bit more tax if i knew that dads were getting to stay home more i just think that would be a better country to live in Yeah.

20:02Okay. Gender. Let's go from that to another absolutely hot topic. Let's talk about race. Last time we recorded, Tamein, you were having some real dramas with your accountant. So how's that been going, mate? They're sacked. So drama sorted. They're a big corporate firm. They didn't really reply to my emails very quickly, like took a week or two at times. And they charged me way too much. I mean, I've got pretty simple taxes and they were charging me thousands. They saved me some money, but yeah, I had to move on. Slow and expensive. Pretty much, yeah. This is one of the reasons that we're really happy to be partnering with TaxApp.

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21:08If you need to file a self-assessment this year, give TaxApp a try. We've left a link in the description and use the code MONEY10 for 10 % off your first tax filing. That code is MONEY, M-O-N-E-Y 1-0. So Mr. O 'Carolet, I hear you are a salesman. Elite salesman, yes. One of the best, they say? I've got a little bit of experience in the game, yeah, I could say. You've done a few deals. Bill, Bill. What would your compliance team say about you? They would say that I am always nagging them and that essentially I just have beef with compliance. I love the team. Compliance slows down all my deals because every time I get to the finish line, they've got to check documents, KYC, GDPR, and it's just a nightmare.

21:51It slows the deal down by like two, three weeks. It's always on both sides as well, isn't it? Sometimes it can be blocked on the other side. Well, that's where today's sponsor can help. Indeed. Vanta helps companies of all sizes get secure and compliant fast. And they stay that way. They do it by automating compliance with over 35 security and privacy frameworks like SOC2, ISO 27001, and HIPAA. Yeah, all of them. And this saves businesses so much time and money. According to a recent IDC study, Vanta customers save over half a million dollars a year in costs. Not bad. And they also help you complete security questionnaires up to five times faster, which is great because everybody hates filling out forms.

22:29If you're a business that needs to prove security and compliance, visit Vanta.com forward slash making money to sign up for a completely free demo today. That's Vanta.com forward slash making money. There's a link in the description though, so you can just click that. Most minority ethnic groups continue to earn less than white British employees, according to the ONS. There are some ethnic groups that do earn more than, say, a white male. In 2019, the median hourly pay for those in the white ethnic group was£12.40 per hour compared to those in the ethnic minority at£12.11. So that's a pay gap of 2.3%.

23:07The pay gap was at its largest in 2014 at 8.4%. Before we go into stats, can you guys give me your personal experience and your view on this? Because I obviously have no view on this from a personal perspective. You want to go first? um i do not think that my ethnicity has impacted how much i've been paid in my work life or in my business life and i've never actually said this like outwardly before but i even think that in my business life it helps me because i'm working in an industry that's not full of people that look like me. And so when I'm sitting on a panel and I'm the only black person, I understand what the people that are organizing that event are trying to do.

23:55They're trying to have a diverse - Yeah. And there's only a handful of you in the space, whereas there's a lot of white males in the finance. And I appreciate that too. And I never sell on the fact that I'm a black creator, a person talking about money. But I would say that in some senses, it's helped me. But I will be honest, that 2.3 % gap is a lot smaller than I thought it would be. Yeah, 100%. Because if I think, so that's just me talking about myself, but if I just look at the people that I know, if I just think anecdotally, I would have expected that gap to be a lot higher. What about you, T?