Brits Financially Underprepared for New Baby
New research shows Brits are unprepared financially for big life events, such as the cost of a wedding or having a baby.
The average cost of these big events is £314,000 according to HSBC, with many Brits underestimating these expenses by £124,000.
Families typically underestimate the cost of raising their first child, on average by £116,000, followed by the cost of a wedding which is underestimated by £11,000. Student debt is underestimated by £9,000.
“Life’s big events can be expensive and many who are yet to undergo them are significantly underestimating the costs involved,” said Richard Brown, HSBC head of savings.
“Some people may have to postpone some of these key milestones unless they fully understand the budgetary implications.”
In comparison, Brits overestimate the average cost of a first deposit for a house by £9,000, and the average cost of a first car by £2,500.
The survey revealed Brits who are yet to experience these events are more likely to save than those who have already achieved them.
Savings for buying a new car were up by eight percent, for a wedding they were up by seven percent and having a first child by nine percent. Those planning on sending a child to university had savings up by 16 percent.
Research by Direct Line recently showed 96 percent of the population want more than they already have, making it even harder for Brits to adequately save for big life events.
The Aspiration Index showed people are willing to fork out £500 extra on a watch, £150 on a handbag and over £3,000 on a new car.
The study shows that 60 percent will save in order to afford these expensive items, while one in five will cut back on meals out and entertainment and 15 percent intend on putting them on their credit card.