Milestones can become millstones
Its report, Milestones & Millstones, shows that although people do tend to plan for the good things in life, like buying a car or a home, many people don’t plan for the difficult or unexpected events in life, as they don’t believe, or don’t like to believe that those setbacks could happen to them.
Caroline Rookes, chief executive, Money Advice Service, said: “While no one likes to think about negative events impacting our lives, today’s research shows that people across the UK could improve their financial situations simply by planning ahead for events that are both expected and unexpected.
“It is quite concerning to see that those significant, planned life events that we all perceive to be positive, such as having a family or buying a home, can lead to financial hardship for millions across the UK.
“The research also really emphasises that that thinking realistically about the unexpected and planning for the future, can help us all achieve and enjoy life’s milestones.”
The research shows more than three million people a year experience a negative event, such as a partner dying, ill health or redundancy, yet many consumers don’t act or ask for advice until it is too late.
The report highlights that buying a home or having children can get people into the longer term habit of budgeting and saving. But these positive events can also become financial millstones as consumers often don’t consider the full cost of the life event, or address the costs sufficiently well in advance. For example, parents-to-be only start financial planning after pregnancy and one-in-five first time buyers suffer financial difficulties as they deal with the ongoing costs of owning a home which end up being more than anticipated.
The research also looks at the problems for ‘Generation Rent’ and suggests many renters may lack confidence in their ability to reach financial goals such as saving a deposit. This means they might disengage from other financial activities, like saving for a pension.