Major milestones are something to look forward to for years in advance, but it's hard to deny that they require a lot of planning and expense. In fact, the latest Lloyds Bank Family Savings report found that a staggering £877,000 is needed to meet the cost of life goals for the average UK couple – a sum that could put the dreams of some people out of reach.
Big life events can include getting married, buying your first home, welcoming a new addition to the family or retiring from work, but all of these events cost money – and lots of it.
Getting married is a big event in many couple's lives, but it doesn't come cheap. It's now estimated that the average cost of getting hitched is priced at around £11,168 – a hefty sum for any couple. As a result, many UK couples find themselves borrowing to produce the funds for their big day, with a typical couple borrowing around 50% of the costs.
Buying a home is also a major life event that needs a lot of cash, and with the average three-bedroom semi-detached house now costing close to £175,000, even saving up for a deposit is likely to empty your pockets. As house prices increase, so too does the size of the mortgage, adding yet more costs onto an already expensive purchase.
The cost of retirement presents an even more dizzying figure – according to the figures in the report, a joint retirement fund will need around £685,000 to maintain a couple's current standard of living throughout their golden years. That's a substantial pension pot that needs to be saved.
Philip Robinson, savings director at Lloyds Bank, said that the sums needed to finance life goals were "daunting". However, he also pointed out that "by getting into the saving habit early you can significantly improve your financial health later in life".
To meet the costs of your big life events, putting away money as savings is a must, and the earlier you start the better.
In fact, those who started saving before the age of 25 were found to be far more likely to be able to meet the costs of their milestones. For example, in the report, 55% of those who are now aged between 45 and 54-years-old own their own home outright after starting to stash the cash before they turned 25. In comparison, only 35% of those who started saving seriously at age 34 or later owned their home with no outstanding debts.
The report also found that saving at a younger age meant that people were more likely to possess non-cash investments in later life, with 60% of those who started saving before the age of 25 owning an investment of this type compared with 40% of those who didn't save before the age of 34. Catching the savings bug at an early age can clearly pay off.
If you want to be prepared to pay for your major milestones, it's time to start saving now. Whether you want a big white wedding, or you plan to have a large family, putting aside some money now can make a big difference when the big day arrives.
A savings account is the best place to stash your cash as you can earn interest on what you put away. If you're saving for a specific event, a fixed rate account could be the perfect option as it will lock those funds away until you need them and will often give you a better interest rate as a result. You can check out the best fixed rate ISAs and bonds by looking at our best buy tables.
However, no matter how much you save, sometimes you will need a little help, such as when you buy your first home. In this case, getting the best possible mortgage deal will help keep your costs down. We've gathered together the top mortgages for first-time buyers – why not check them out to see what deals are out there?
Finally, it's important to not forget about retirement. If you're not already enrolled in your workplace's pension scheme, join now. The sooner you start paying into a pension pot, the more money you will have when it is time to start your work-free days. If retirement is not too far away, you can also check out our no-obligation annuity planner to discuss your options.
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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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