How much does the average person spend in a lifetime?
Life can be expensive. Whether you’re paying a little extra for something luxurious or being ambushed by a surprise expense, it’s easy to believe there’s been a hole in your wallet or purse at the end of every month.
But, have you ever wondered what the collective cost for all of this is? How much do we end up paying to live our lives across the years? Well, we’ve done the maths and found the answer — and it’s quite shocking.
The average Brit in 2021 will end up paying a whopping £1.5 million over the course of their life (£1,543,834 to be precise). This is £150,000 more than what the average Brit will earn over a lifetime, which is around £1.35 million.
Some of the most expensive contributors to this cost include:
- Buying a house: £266,742
- Recreation, alcohol and eating out: £209,553
- Raising children: £169,159
- Christmas spending: £69,973
- Birthday spending: £24,578
- Wedding: £15,987
- Divorce: £2,058
- Pets (dogs and cats): £95,200
Was life always this expensive?
Around 50 years ago, in 1971, the lifetime spend only came in at £89,453, with the top costs being children (£14,738), transport (£8,268) and housing fuel and power (£7,789).
Though rising costs are to be expected over the decades, there are some cost increases that have spiralled since the 70s. For example, 50 years ago, a worker only needed to save up three times their annual salary to be able to afford a home, but now house prices are so high they need to accumulate eight times their salary to become a homeowner.
Will life become more expensive in the future?
While inflation will rise and fall over the next few decades, and some costs will hit a ceiling or reduce as habits change, the cost of life by 2071 will increase alarmingly.
Should the UK follow the same inflation path over the next 50 years, the average UK life spend would sit at £19,190,395 — a 1143% increase from 2021. To put this into stark contrast, the average UK lifetime earnings at that point could be £3,869,685, which would not come close to meeting the costs of living.
How can you mitigate the rising cost of life?
While the prospect of a steep cost of life is certainly daunting, it’s valuable to remember that there are some things you can do to mitigate the rise. Here are some of the best ways to take positive steps to secure your financial future.
Try saving in creative ways
If you find it challenging to keep up a regular saving habit to help you build up a rainy day fund for the future, you could try some creative methods instead.
For one, you could try the rounding up method, where any purchases you make you round up to the nearest £1 or 50p, then add the difference to your savings. Another easy way to shake your habit up is to take on the 1p challenge — start by saving 1p on day one, 2p on day two and so forth, then by day 365 you’ll be putting away just £3.65 but will have pocketed £667.95 over the year.
It’s a good idea to put any money that you set aside into a separate savings account so that it’s held apart from your regular bank account — this will make it easier to manage and make it less tempting to spend. If you might need to access your funds in a pinch, you can always choose an easy access savings account, like our Instant Saver.
Get savvy to find the best rates and deals
Some things are inevitable: death, taxes and inflation. However, you can take some of the sting out of those rising prices by making sure you save with a bank that offers you a competitive interest rate. This will make sure your funds are being put to work, and the more interest you earn, the more you can reinvest — it’s a safe way to grow savings in the long term and insulate yourself from inflation.
Taking the time to find the best rates and deals can help you save in other areas of life as well, whether it’s your broadband, gym membership or utility bills. Be proactive and spot opportunities to pay less and you’ll claw back some of life’s costs.
Brush up on your financial knowledge
Becoming more financially literate is an invaluable skill that costs nothing to develop. By educating yourself about money, from taxes to budgeting, you will become equipped to know exactly where your funds are going and how to plan ahead and maximise growth.
There are plenty of ways for you to improve your knowledge, including blogs, courses, video tutorials, books and podcasts — a great deal of which are completely free.
Improve your credit score
With a high credit score, you may be able to get access to the best deals when it comes to interest rates — in some cases, you might be able to forgo paying a deposit on some contracts. When lenders see you as a more reliable borrower, you can end up paying less interest, which in turn helps to keep the cost of life to a minimum.
To build up that credit score, you should always pay your bills on time and pay off any contracts regularly. Read our blog post on factors that could be harming your credit score to check whether you’re doing anything that could be working against your credit.
Get assistance from financial schemes
Depending on your circumstances, you may be able to get assistance from one of the UK Government-backed financial schemes available to you.
Because a house is the top contributor to the cost of life, the likes of the Help to Buy scheme and Lifetime ISA can provide essential support to help you get the most out of your savings or lower your overall spending on a home.
Find a life balance
We’ve discussed a number of specific ways you can mitigate the cost of life, but to conclude it’s worth saying that, as long as you’re sensible, there’s no need to sacrifice your quality of life now to save for the future. It’s all about finding the right balance between being frugal and treating yourself every now and again.