Britons underestimate the cost of life’s big events by £124,000, new figures have shown.
Research carried out on behalf on HSBC reveals that the average Brit fails to budget enough for six key milestones in the lives: buying a first car, going to university, putting a deposit down on a first house, getting married, having a child, and sending that child to university.
The survey of over 1,000 UK adults found that people particularly miscalculate the cost of raising their first child, believing it will cost them an average of £85,788 – over £116,000 lower than the real cost of £201,809.
The price of a wedding was also underestimated by £11,000 (£19,779 rather than £8,627), while predictions for student debt (£11,012) were considerably lower than the true amount of £20,000.
While Brits overestimated the cost of their first car by £2,500 (£2,470 rather than £4,967), and the deposit on their first house by over £9,000 (£28,770, not £37,917), the survey found that there is an average shortfall of £124,000 between the actual cost of life’s biggest events (£313,859) and people’s expectations (£190,156).
Brits expect savings will pay for big events
The research also showed that more Britons plan to pay for life’s big events using their savings than those who have already achieved them.
58% of those who are married paid for their wedding using savings, while 65% of those who are unmarried plan to do the same – a 7% increase.
The same is also true for raising a child, which 48% of childless people expect to fund using savings, against the 39% of parents who actually did.
Richard Brown, Head of Savings at HSBC said: “Life’s big events can be expensive and many who are yet to undergo them are significantly underestimating the costs involved.
“The reality is that some people may have to postpone some of these key milestones unless they fully understand the budgetary implications and start planning their finances or saving earlier.”
If you are looking to budget for life’s big events, there is plenty of advice on the Which? website.
For those hoping to fund them through savings, our website offers general tips on savings and investments, as well as mortgages and property, cut the cost of your wedding reception and ways to save on motoring.
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