In a fashion-meets-finance article, award-winning financial planner Pete Dunn said we should spend 5% of our take-home pay on clothing. To help you figure out what this means for you, we calculated this clothing budget for various levels of annual salary.
Using an income tax calculator, we first calculated the take home pay for a range of salaries between £16,000 and £100,000. From there we determined the clothing budget by taking 5% of the monthly take home pay. For example, someone earning a £20,000 annual salary takes home £17,136 per year after taxes (£1,428 per month). Applying the 5% clothing and shoe budget recommendation means having £71 per month to spend on fashion. We calculated this as follows: 5% of £1,428 is £71.
Those earning a higher salary have more ability to spend. For instance, someone a £30,000 salary could technically afford a £100 monthly clothing budget. In this case, the additional £10,000 in annual salary (i.e., from £20,000 to £30,000 per annum) provides an additional £29 each month for clothes. At the upper extreme, someone on £100,000 per year could spend a whopping £277 each month on clothes and footwear.
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When deciding how much to spend, remember that these numbers are guidelines only. Everyone's budget is unique. If you live in an area with a high cost of living, you may need to budget less than this on clothing. Or you may choose to spend, for example, less on clothing and more on savings (which will help in the case of an unexpected financial event or even retirement).
Here's How Much You Need to Earn to Spend £200 on Clothes Each Month
Another way to look at this data is to determine the salary you need to earn in order to justify a certain monthly shoe and clothing expenditure. This can give you a target to shoot for, or maybe even motivation to ask for a raise!
For example, if you want to spend £100 each month on clothes, you'd need to be on an annual salary of £30,000. A £150 monthly fashion budget requires an annual salary of £48,000 and you'd need to earn £89,000 per year in order to justify spending £250 per month on shoes and clothes.
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How Much do UK Households Actually Spend on Clothing?
UK households spend less than 5% of their take-home pay on clothing. The average UK household takes home £34,200 of disposable income each year. Assuming this household were to spend 5% of their take-home pay on clothing, they'd have a fashion budget of £143 per month.
In reality, households spend less than this. According to the latest Family Spending report from the Office of National Statistics, the average weekly household expenditure is £19.50 on clothing and £4.80 on shoes, totaling £24.30 per week or £105 per month—which is only 3.7% of the average take-home pay.