Average cost of life rises to £1.5m – 6 expert tips to help you save – Express

by MoneySaverExpert

Although rising living costs are to be expected over time, there are some alarming disparities that have widened between now and 50 years ago. Housing prices have skyrocketed by a staggering 5,704 percent, are soaring to record highs, and are the most pricey they’ve ever been, with UK households being warned their bills are yet to increase by up to 50 percent by spring.

Atom Bank recently calculated that, based on the average UK life expectancy of 80.7 years, the average cost of life for a person living in the UK currently amounts to a staggering £1,543,834.

The most expensive contributors to the cost of the average life are recorded to be buying a house, followed by recreation, alcohol and eating out, and then raising children.

Over the past 50 years, house prices have increased by 5,704 percent.

In 2021, the average house cost £266,742, which is over nine times the average salary of £29,600.

The average Brit is calculated to spend £209,000 on eating out, alcohol and recreation in their lifetime, while raising a child is said to cost a startling £169,159 based on the average of 1.9 children per woman in the UK.

Atom Bank calculated the average cost of a life in 1971 to be £81,453, a stark contrast to the £1.5M it costs today.

Most notably, back in 1971, the average worker needed to save less than three years of their annual salary to be able to afford to buy a house.

Now, the average buyer needs to save over eight times their annual salary to purchase a house.

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Clare Framrose, head of savings at Atom bank said: “The predicted rising cost of life can feel pretty scary but there are steps we can take as a society to ease the rate of inflation and be better financially prepared for the future.

“The government needs to admit we are facing a cost of living crisis and put in measures to counteract it, both in the long and short term.

“On a personal level, there are also ways to mitigate the rising cost of life, including becoming as financially literate as possible and making the most of available saving schemes.”

Clare shares her top six tips on making your money go further to mitigate the cost of life.

Get creative with how you save – and spend – your money

In general, we’re more likely to stick to habits that challenge and excite us and it’s no different when it comes to saving.

Clare said: “To keep things exciting, try taking on a different savings challenge each year.

“A good one to start with is the rounding the change challenge, where you round up all your purchases to the nearest 50p or £1 and save the difference – it all adds up!

She continues: “Another fun one is the 1p challenge, which lasts a year but will see you save £667.95 by the end.

On day one, you save 1p, then 2p on day two and 3p on day three, building up until you’re saving £3.65 on the last day.

Shop around for the best deals, from banks to bills

Like the rainy British summer and the rising cost of beer, inflation is inevitable, but that doesn’t mean there aren’t ways to alleviate the pain of ever-rising prices.

Clare advised: “Finding a bank that offers you a competitive interest rate can gain you more money without you having to work for it.

“The more interest you earn, the more you can reinvest. It’s a perpetual net gainer for your money and a safe investment for the savvy saver.

She adds: “Additionally, whether it’s for your broadband or your gym membership, shop around for the best deals; renegotiate your contracts at the end of leases and don’t let your memberships roll over without having a good look at what’s out there.

“There’s always a better deal and always room to negotiate.”

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Better your financial literacy

Clare said: “An invaluable tool that costs you virtually nothing, becoming financially literate is a great way for you to educate yourself on the intricacies of your money.

“From taxes to budgeting, a firm knowledge of where your money is going alongside knowing how to properly plan can ensure you know that your money is being spent well.

She adds: “Depending on how you learn, there are blogs, online courses, podcasts and even TikTok videos on financial planning that offer invaluable guidance on how to educate yourself. And best of all, a wide range of it is completely free!”

Build up a strong credit score

A strong credit score can grant you access to lower interest rates and can even help you forgo a deposit for some contracts.

Clare said: “Make sure you pay your bills on time and pay off contracts regularly and your credit score will soar, meaning you’ll be rewarded with better options on borrowing on everything from your mortgage, to your car, all of which will save you a pretty hefty sum over a lifetime.”

Make the most of the financial schemes available to you

There are a number of government-backed schemes that can help your savings go further.

Clare advised: “With buying a house coming out as the top contributor to the cost of life, make the most of help to buy schemes and lifetime ISAs to boost your savings.”.

Schemes such as the ‘Help to Buy: Equity Loan scheme’ where the government lends homebuyers up to 20 percent of the cost of a newly built home can significantly lower your overall spend on housing.

Strike a balance

The rising cost of inflation can feel pretty daunting, but there are plenty of options and opportunities to mitigate the rising cost of life while still enjoying yourself.

Clare said: “While it’s important to be frugal and financially savvy, that doesn’t mean you should sacrifice the enjoyment of your life now in an effort to solely save for the future.

She added: “Often, an awareness of your spending habits and the ability to not chastise yourself over every purchase can lead to a lifestyle that is both financially and mentally sustainable.”

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