Weekly Round-Up: 25th January 2019

Paying more

ShoppingIn its latest review of the spending habits of the UK population, the Office for National Statistics found that the average weekly household expenditure was £572.60 in the financial year ending 2018; the highest weekly spend since the financial year ending 2005, after adjusting for inflation.

Transport was the category with the highest average weekly spend of £80.80, equivalent to 14% of households’ average total weekly expenditure and those households whose occupants were aged between 50 and 74 years appeared to have spent almost a quarter of their housing expenditure costs on alterations and improvements. £76.10 on average was spent on housing, fuel and power and £74.60 on recreation and culture. When Transport is added in, this accounts for 40% of total average weekly household expenditure (14%, 13% and 13% respectively).

Average weekly household spending was the highest in London and the South East (over £650), whilst spending in the North East was the lowest, approximately £200 less. Households with heads aged under 30 years and those in Northern Ireland spent the most on takeaway meals eaten at home, £7.80 and £8.60 respectively. Households’ average weekly spend on alcoholic drinks away from the home was less in the financial year ending 2018 (£8.00) compared with 10 years ago (£10.90), after adjusting for inflation.

Households in London spent the most on alcoholic drinks away from home, spending an average of £9.30 a week.

Drive down

Motor InsuranceDespite reports suggesting premiums are going up, figures published this week by the Association of British Insurers (ABI) suggest that actually there was an overall fall in the average motor premium paid in 2018, with the seasonal rise in quarter four premiums lower than normal. This is the first calendar year fall since 2014, according to the latest ABI Motor Premium Tracker. The fall came despite a rise in the average premium paid in quarter 4 last year over the previous quarter, in line with the seasonal trend.

The ABI’s Premium Tracker is the only survey which measures the price that consumers pay for their motor cover, rather than prices quoted. The average price paid for motor insurance in 2018 was £477, down 1% on the previous year, and in line with the seasonal trend, the average price paid for cover in quarter 4 of 2018 rose slightly on the previous quarter, up by 2% to £479.

However, this was the lowest quarter 3 to quarter 4 rise since 2013 with the rise in average premiums reflecting lower car sales, with insurers’ fixed costs needing to be spread across fewer motor polices.

Life costs

MarriedAnyone planning how to meet their big life dreams in 2019 take note: the best things in life are very much not free. That’s if your aspirations are on the conventional side, anyway.

Royal London, the mutual insurer has calculated that the major life goals of going to university, buying a house, getting married, having two children then retiring comfortably add up, on average, to an eye-watering £566,659 over the course of a lifetime. On a median UK annual graduate net salary of £22,421, if you were spending your salary only on the fulfilment of your dreams, the insurer calculates these goals would take 25 years to pay for.

That figure includes typical mortgage interest but is without any interest from loans, credit cards or overdrafts added – and assuming you stay in the first home you buy. Adding a second property purchase and associated stamp duty into the mix – as well as saving for your children’s futures on top – could push up the total bill for a dream life to more than £1 million. The insurer suggests a mixture of long-term planning, regular saving and cost-cutting where possible to manage the cost of your dreams.

Royal London took the typical cost of the big six traditional life goals, as follows, before dividing the total by £22,421. Going to university will cost you approximately £23,000, buying a house with a 10% deposit and paying the average cost of a first-time buyer property is £250,148, the average cost of a wedding, is £30,111 and having two children could cost £150,000.

Then, to retire comfortably: the pension pot most people would need to be £300,000, which would require a total personal contribution of £113,400 between the ages of 25 and 67, according to Royal London.

Check the small print

Co-habitingAccording to analysis by NatCen Social Research nowadays, cohabiting couples (both opposite and same-sex couples) are the fastest growing type of family, more than doubling from 1.5 million families in 1996 to 3.3 million families in 2017, with 15% of dependent children living in cohabiting couple families.

In England and Wales, cohabitants have no legal status and, therefore, no automatic rights in most circumstances – especially if the relationship comes to an end. For example, if one partner dies there’s no right for the other to inherit part of their estate – regardless of how long they have lived together and even if they had children together. Equally, there is no exemption for tax purposes and no legal duty to support the partner financially.

Yet almost half of people (46%) living in England and Wales are unaware that this is the case and think that an unmarried cohabiting couple have a “common law marriage” with the same legal rights as a married couple, according to the latest British Social Attitudes Survey. This figure is largely unchanged since 2005. The data also shows that people living in households with children are significantly more likely to think that common law marriage exists than those in households with no children (55% vs 41%) and singles (39%). Worryingly, cohabitants (48%) are no more clued up than married people (49%).

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