Debt may mount as big event costs underestimated

The cost of paying for some of life’s biggest undertakings could come as a shock to many people, new research has indicated.

A survey by HSBC has found the average person believes the combined typical cost of student debt, getting married and starting a family adds up to £190,000.

However, the figure is much higher at £314,000 and such a differential may cause practical problems for those wanting to take these steps in life, as the amount of money they have saved up could be far less than required, leading to a need to borrow or build up credit card debt to plug the gap.

Examples of this could include getting married, which costs £11,000 more on average than is commonly supposed.

Having a first child will require £116,000 extra and a house deposit needs £9,000 more than the average person yet to do such things believes.

Head of savings at HSBC Richard Brown said: “Life’s big events can be expensive and many who are yet to undergo them are significantly underestimating the costs involved.”

Those who take on major commitments without realising how much it will cost may find their income is not enough and they end up in deep debt, something that may leave consumers in a dire position where individual voluntary arrangements could be needed to avoid bankruptcy.

Taking big steps in life at a young age is a much more expensive thing to do now than a quarter of a century ago, research published last week by First Direct revealed.

It found those wanting to marry, buy a house and start a family at the age of 25 now – something their parents would typically have done by that age in the 1980s – will need to earn 55 per cent more to afford it.

By Amy White