New research from HSBC has found that people are dramatically underestimating the cost of life’s big events such as weddings and the deposit required to buy a first home.
These big life events cost an average of £310,279 but Brits estimate the cost at only £178,140.
This results in a shortfall of £132,139 between expectations and reality.
The cost of raising a first child is the life event with the cost that most of us underestimate, to the tune of £92,000.
Whilst the average cost of raising a first child is £165,648, the average expected cost is £73,221.
University debt is another area where most of us dramatically underestimate the costs involved. The average cost of student debt is £43,500, against an average estimated cost of £9,541, a shortfall of £33,959.
Getting these estimated life event costs wrong can put a big hole in your financial plans.
One way to ensure a more accurate estimate is to work with a Financial Planner to establish a robust and regularly reviewed financial plan. This can result in more consideration being given to the numbers involved with major life events, as the Financial Planner will draw on their experience with multiple clients to inform accurate numbers.
What most people don’t want to experience is an unexpected shortfall between expectations and reality, particularly when it comes to significant capital expenditure and when this takes place in later life.
Find out more about our LifeWealth Design Financial Planning service
Photo credit: Flickr/MoHotta18
