How Do People Afford To Live In London? (10 Ways)

When you think of London, you might think of double-decker busses or fish and chips.

However, you might also think about the cost.

London was ranked the world’s 4^th most expensive city in 2022 by CNN Travel.

This leads many to wonder how people afford life in this pricy city.

If you want to move to London or are just wondering how people afford to live there, here are some of the strategies that locals use to manage their lifestyle.

How Do People Afford To Live In London? 10 Ways

1. Living With Flatmates

While Americans use the term “roommates” to describe people they live with, the British use the term “flatmates.”

In London, a “roommate” is someone whom you literally share a bedroom with.

Most Londoners are able to avoid having to share their room, but many choose to share their apartment (a.k.a. flat) with other people to help keep costs down.

Usually living with flatmates is something that we associate with the lifestyle of young people.

Since London is so expensive, even older people are sharing flats nowadays.

In 2015, The Guardian reported that the number of flatsharers aged 45-54 had risen by 300% in the previous five years.

This is because many of the older generations cannot afford to buy flats or even rent them alone.

While living with flatmates can be understandably stressful, especially for the older crowd, it can also have its benefits.

According to Everyday Health, people who live alone have an 80% higher chance of suffering from depression than those who live with other people.

If you find a set of flatmates who you get along with, it won’t only be the rent you can save on.

Some utilities can be split as well.

And if you really get on well, you can cook meals together and share grocery expenses, which will save you money in the long run.

2. Higher Pay

London is not the kind of city that attracts many “digital nomads” when compared to low-cost-of-living cities like Chiang Mai.

This is because for people who can work anywhere, the cost of London usually doesn’t make sense.

For those who are not going to work remotely, though, London might still be a good option if you can land a job.

If you work in London, you are going to get London pay.

For many that would mean a significant raise in a very strong currency.

Different outlets report drastically different average salaries for London.

For example, averagesalarysurvey.com reports that the average salary is around GBP 70,682 per year which is USD 85,097.

However, plumplot reports that the average salary is GBP 53,700, which is a lot less.

Even still, plumplot reports that the UK has an average salary of GBP 38,100 per year.

So, this does mean you will probably be getting paid significantly more in London to make up for that increased cost of living.

The best thing you can do when setting yourself up for a successful life in London is to negotiate your salary and search for high-paying positions.

This doesn’t mean that you should be unrealistic: apply for jobs you can do.

Just because you want to make more money doesn’t mean that you should be hired as the CEO of a company.

Negotiation can definitely make a difference in your salary.

Forbes reports that 70% of managers expect a negotiation when they make a job offer.

For those who do negotiate, their starting wage raises an average of 7.4%.

CNBC reports that 85% of Americans who counter-offered a job offer were successful.

These results are likely to be similar in the UK, which has a very similar business culture.

3. Mindful Shopping

Along with rent, food is one of the largest and most consistent expenses that most families have.

If you are looking to save on your grocery bill, where you shop matters.

A classic piece of advice many Londoners give on how to save money is to “avoid M&S!”

M&S is short for Marks & Spencer.

It is a very nice grocery store with lots of tempting products like pre-made salads and sushi.

You are paying a price for the nice packaging and selection, though.

If you want to save money, Aldi and Lidl are going to be your best bet for grocery shopping.

How much can you save?

Somerset Live did a shop comparison and bought the same 10 items at M&S and Aldi.

The price for shopping at M&S came out to be £22.55 and at Aldi, it was £13.97.

That means a savings of £8.58.

Pretty significant if you add it up over time!

4. Affordable Healthcare

Americans might be shocked to see the kind of salaries that Londoners live on.

However, you must take into account that the UK has national healthcare.

The average cost of health insurance in the US is $7,739 per year for individuals.

US health insurance doesn’t cover all health costs though.

You are still going to pay an average of $24 for a co-pay for a doctor’s visit and many Americans must meet a deductible before most of your coverage even kicks in.

That deductible is typically more than $1,000.

So you are looking at saving several thousands of dollars per year in healthcare costs.

This is especially true if you have a major medical event.

For example, the cost to have a baby with insurance in the US reportedly averages $6,940.

That is assuming the baby is healthy with no complications.

Remember, that is in addition to you paying thousands of dollars a year in insurance fees.

In the UK, by contrast, it costs around $2,300 for an average vaginal delivery or planned C-section.

But that isn’t what people are paying out of pocket!

The National Health Service (NHS) covers childbirth completely.

So it will be $0 out of your pocket.

Let’s take another fairly common life event.

According to cancer.gov, 39.5% of men and women will be diagnosed with cancer in their lifetime.

The average cost of cancer treatment in the US is $150,000.

However, that number represents the average before insurance.

Asbestos.com found that only 20% of people spent more than $20,000 on their cancer treatment.

This, of course, does not include costs like lost wages and having to travel for treatment.

Still, on average, Americans who move to London can save many thousands of dollars during their lifetime.

If you don’t have health troubles or children to spend money on, the money saved could be enough to buy you a flat in this super-expensive city.

And healthcare costs are something that the cost-of-living calculators fail to take into account.

So take London’s ranking with a grain of salt!

5. No Cars

Many, if not most, Londoners live without a car.

This is a huge expense that can save you a ton of money if you forgo it.

When many people think of the costs of cars, they think only of buying the car.

The average cost of a new car in the UK is reportedly between GBP 12,000 and GBP 36,000.

The average monthly car payment comes in at GBP 194.80.

According to Nimblefins, the average cost for using a petrol car is GBP 1,272.25 per year and for diesel, it comes out to GBP 1,683.26.

Another added cost for many London drivers is parking.

This often involves renting out a parking space.

Since parking space costs vary throughout the city, it will depend a lot on your location.

It will typically cost you somewhere between GBP 200 and GBP 1,000 per year.

You also have to factor in car insurance.

London has some of the highest car insurance prices in the UK, with an average of GBP 679 spent on car insurance.

Then there is maintenance.

Maintenance is going to run you an average of GBP 270 per year but can cost a lot more depending on how old your car is and whether it needs any major repairs.

So you are looking at a few thousand dollars a year to own a car in London.

Luckily, you don’t need a car in the city!

The cost for a single journey on the tube (a.k.a. the metro system) is £2.50 in zone one if you are paying with a contactless card or Oyster card.

The maximum amount you will be charged for a full day (if you are using the same card throughout the day) is £7.60 if you stick to zone one.

If you get a monthly tube pass, it will be even cheaper if you are traveling multiple times every day.

For zones 1 and 2, a monthly pass is going to run you £147.50 a month.

However, if you are really committed to saving money, the best thing you can do is stick to the buses and trams.

Skipping out on the underground can save you a lot.

The daily cap for the bus fair is £4.95 and the monthly bus pass is only £89.50.

That means that taking only the bus instead of the underground will save you £696 per year even if you are only traveling in zones 1 and 2.

Whether you opt for the bus or the underground, you will save hundreds of pounds a month compared to using a car.

That is money you can use to help pay for essentials like food and rent.

6. Compromise On Your Location

In addition to having roommates, compromising on the location of your apartment or house is the biggest thing you can do to save on housing.

Housing is typically going to be the biggest monthly cost Londoners will have to factor into their budget.

According to Trust For London, the average person would have to spend 45.3% of their pre-tax monthly income if they wanted to rent a typical one-bedroom apartment in London.

Comparatively, the average person would have to pay 25.5% of their income to afford a one-bedroom apartment or house somewhere else in England.

Even within London, though, there is a huge variety in housing costs.

London is broken into 6 zones, with zone 1 being the most central and zone 6 being the least central.

Housing in zone 1 is going to be the most expensive, followed by zones 2 and 3.

Moving to one of the outer zones can help you save substantially on housing.

This is true even if you are buying.

The average cost of a mortgage in zone 1 is £1,484,906.

By comparison, the average mortgage for a home in zone 2 is £793,906.

By zone 3 that cost drops to £634,091.

In zone 5, the cost is less than 1/3 of what it would cost to buy in zone 1, with the average mortgage costing £452,186.

This phenomenon is not limited to buying.

Of course, the higher a house costs to purchase, the more rent it typically commands—and rent prices follow the same trend.

They are most expensive in zone 1 and significantly less expensive in zones 4 or 5.

The neighborhood in which Londoners pay the most rent is Westminster, where the average person would pay nearly 70% of their salary to rent a one-bedroom apartment.

Westminster is located in zone 1.

The least expensive neighborhood, Bexley, requires the average person to spend 34% of their salary on rent.

Bexley is located firmly in zone 6.

Of course, when you are moving out of central London to the outer zones, it is also important to consider the cost of transportation.

You also should consider the value of your lost time spent on transportation.

Even with these things considered, though, most people will save a huge amount of money by moving out of zones 1 and 2.

7. Take Advantage Of Free Entertainment

One of the advantages of living in London is that there are plenty of free things to do at any moment.

It doesn’t matter what time of year it is, there are always tons of events going on.

Here are some options for free things to do.

A. Check Out The Barbican Conservatory

The Barbican is the center where much of London’s famous theater scene takes place.

To see a show, you will need to pay for a ticket.

However, the Barbican features a conservatory that is free to explore!

B. The British Museum

It might surprise you to know that one of the best museums in the world is located in London and it is free!

You can book a ticket in advance online to avoid having to wait in long lines and to guarantee your visit.

C. The Natural History Museum

This is another great option for those who love learning!

The natural history museum is a great way to spend an afternoon if you are the type of person who loves learning about the natural sciences.

Just like the British Museum, you could spend multiple afternoons exploring the Natural History Museum.

D. The Science Museum

The science museum is a great free option for all the science lovers out there.

Just like the other museums on this list, it is best to reserve a free ticket ahead of time to guarantee your spot.

E. Enjoy Lunchtime Concerts At St. Martin In The Fields

St. Martin in the Fields has a series of free concerts that happen on weekdays at lunchtime.

If you are a fan of classical music, this can be a great entertainment option for you!

9. Change Your Energy Provider

Most people just accept the energy provider that was chosen by the previous tenant or that the landlord picked.

You might not even be aware that changing your energy provider can be an option, but it is!

The best part is that it can save you hundreds of pounds per year.

Sites like Uswitch.com and GoCompare.com allow you to compare different energy providers to find the best deal.

These sites aren’t just limited to energy provider comparisons, though!

They let you compare mortgages, Internet costs, phone costs, and a whole host of regular expenses to help land the best deal.

Using comparison sites and shopping for the best option can make a huge difference in your monthly budget.

10. Consider A Side Hustle

If you are committed to living the big city life but your current salary isn’t enough to make ends meet, consider finding an additional job.

There are many great options, especially with the increasing move toward remote work.

If you know how to write or you are good at Photoshop, you could land yourself a few hundred bucks a week by doing part-time freelancing work for different clients.

You could even get a more stable, in-person job.

If you love spending nights out, you could get into bartending.

That way you get paid to socialize and hang out at the bar.

Another possibility is to look into starting your own business.

If you have a skill set you could monetize, creating your own business can be a great opportunity to help make ends meet.

If your house has spare rooms, this can be another potential side hustle for you.

Renting out your spare rooms on websites like Airbnb can net you hundreds or even thousands of pounds per month—especially in a city like London.

According to a Sun article published in 2018, there is even a government scheme that allows you to earn up to £7,500 per year tax-free by renting out a spare room in your house.