Life is filled with significant milestones, each marking a shift in personal goals, responsibilities, and finances. From buying your first home to retirement, each step requires careful planning and budgeting to ensure you’re financially prepared. In the UK, where the cost of living can fluctuate, budgeting for these major milestones is crucial. Here’s a guide on how to budget effectively for key life milestones.
Buying your first home
For many people, purchasing a home is the biggest financial milestone. However, it’s not just about saving for a deposit, there are other hidden costs to consider.
How to budget:
- Deposit: In the UK, a standard deposit is around 10% of the property price, although some schemes (like Help to Buy) may require as little as 5%. For a £200,000 house, you’d need at least £20,000 saved.
- Stamp Duty: This is a tax you pay when buying property, and the rate depends on the price of the property. For first-time buyers in England, you pay no stamp duty on properties under £300,000 (as of March 31st 2025).
- Legal Fees: Solicitors and conveyancers can cost £1,000–£1,500 for basic services.
- Home Insurance: Don’t forget buildings and contents insurance, which is an ongoing cost.
- Mortgage Fees: There could be application fees, valuation fees, and booking fees.
Start by creating a savings plan and aim to save at least 10-15% of your target house value, factoring in all the additional costs. A helpful tip is to also track your monthly spending and cut back on non-essentials to fast-track your savings.
Getting married
Weddings are a momentous event, but they can also be expensive, depending on how grand you want the celebration to be.
How to budget:
- Set a realistic budget: The average wedding in the UK costs around £20,000. However, it can vary depending on location, size, and the time of year.
- Track all costs: Your wedding budget should cover venue hire, catering, dresses, suits, entertainment, photography, flowers, transportation, and potentially the honeymoon.
- Save well in advance: Starting early is key. Create a savings plan and consider setting up a separate wedding fund.
- Prioritise: If you want to have an elegant wedding but don’t want to stretch your budget, prioritise the aspects of the wedding that are most important to you—whether that’s the dress, venue, or catering. Consider trimming costs on others, like decorations or flowers.
Starting a family
Having children is one of the most significant milestones, but it’s also one of the most expensive. The cost of raising a child in the UK can reach approximately £150,000 to £200,000 by the time they turn 18, according to various studies.
How to budget:
- Pregnancy and childbirth: The costs associated with maternity care are mostly covered by the NHS in the UK, but private care or additional services like antenatal classes may come with extra costs.
- Childcare: Childcare can be a huge financial burden. Full-time childcare for a child under two years old costs on average £250–£350 per week in the UK.
- Schooling: State schools are free, but you’ll need to budget for uniforms, extracurricular activities, trips, and after-school care. Private schooling, however, can cost £10,000–£20,000 per year.
- Other costs: You’ll also need to budget for everything from diapers, clothes, and baby gear, to school supplies and hobbies as your child grows.
Consider starting a savings account dedicated to your child’s education or general future needs, and regularly contribute to it to cushion the financial burden later on.
Saving for retirement
Planning for retirement is an ongoing milestone that begins the moment you enter the workforce. While many people rely on the State Pension, it’s often insufficient for a comfortable retirement, especially given the cost of living.
How to budget:
- State Pension: The State Pension provides around £10,000 a year if you’ve made sufficient National Insurance contributions. This may not cover all your living expenses, so aim to supplement it.
- Private Pension Schemes: Contributing to a private pension is essential. Many employers in the UK now offer workplace pensions, where they contribute on your behalf. It’s also worth looking into individual pensions (e.g., a personal pension or self-invested personal pension).
- SIPPs and ISAs: The Self-Invested Personal Pension (SIPP) and Individual Savings Accounts (ISAs) are great ways to save for retirement. SIPPs offer tax relief on contributions, while ISAs allow tax-free interest and dividends.
- Budgeting for retirement: Start saving early, and make it a part of your monthly budget. As a general rule, it’s advised to save around 15% of your gross salary for retirement.
Budgeting for major life milestones
From buying a home to retiring comfortably, each milestone in life demands careful budgeting and forward planning. The key is to start early, set realistic financial goals, and regularly review your budget to ensure you’re on track. By being proactive and staying disciplined with your finances, you can confidently navigate the financial challenges of major life milestones in the UK.
