Britpop dominated the UK music scene and the England’s men’s football team were on the verge of missing a crucial penalty against Germany.
Society was terrified that the lads and ‘ladettes’ were bringing culture down and would spell the end for a generation.
Jump to now and Britpop is only part of novelty festival acts, the men’s team still hasn’t won anything, and the UK’s drinking culture seems to be in flux with a younger generation less interested in boozing while we are all more attached to our phones[1].
Getting past 30, in my experience, leads to people looking to settle down. Moving on from your twenties where sleep was something other people did, and the hangovers did not seem to last as long.
By no means does this cover everyone, but in my client base there is a drive to put down roots often coinciding with settling down with a long-term partner and building a family.
These matters can become entwined especially in terms of affordability and sometimes joining forces seems to be the only way to get on the property ladder.
Stay Together
In 2021, 46.9% of the UK population were in a legally recognised partnership, a reduction of 11.5% over the previous ten years[2].
While it is assumed that divorce rates are rising, in 2022 the number of divorces fell by 29.5% compared to 2021 – the lowest number since 1971[3] and although this increased again in 2023, it still remains below 2021 figures.
Although the structure of civil partnership or marriage provides some inherent protections for both parties, for those outside this structure it can lead to stress and anxiety regarding family finances.
This means that prenuptial agreements, in advance of marriage, or cohabitation agreements, for those choosing not to proceed down that path, are becoming more and more essential.
Both of these arrangements have strict criteria that needs to be met to be effectively enforceable in England and Wales[4].
However, they are jumping off points for a relationship that allows individuals to understand where they are moving in the long term. Don’t get me wrong, it’s not a fun conversation but it is one that can provide protection for both parties as well as their children.
Park Life!
Moving into your 30s, especially in an employee driven market, will see a drive to leverage workplace experience to increase earnings. From this the opportunity arises to get out of the rental market and into owning a property.
While the switch from paying someone else’s mortgage to paying your own makes sense, alongside the long-term capital growth prospects of property, it is not without risks.
Someone in their 30s has likely never truly experienced a high interest rate environment compared to those in the past. If this does occur then homeowners may find issues with affordability and price variation, potentially even a chance to fall into negative equity if there is a value crash. This can be a real issue for those over extended.
For those looking to get on the property market Lifetime ISAs are essential. Very few investments provide you with an immediate 25% uplift in value (as long as you meet the qualification) and the ability to put this towards your first-time purchase is a real difference maker. This gives a couple putting £4,000 each aside in a year the buying power of £10,000 for purchasing their first home. Keep saving like this for a few years and they could have a nice deposit.
Babies!
It’s true that a mortgage can absorb a large amount of your wealth however, it is maybe children who represent the largest cost over time.
I nearly cried the first time I realised that nursery fees for a month cost more than my mortgage payment and I am probably not alone in that.[5]
Taking advantage of the tax allowances available to you are key. In a recent conversation with a friend, they were not aware of tax-free childcare nor the ability to apply for funded hours[6]. These are easy to apply for and something I would recommend everyone takes advantage of.
It’s important to start taking care of yourself and the family now by putting aside a little cash to help develop the all-important emergency fund to fall back on. As well as considering putting in place life insurances and protection should the worst happen to support the family.
Live Forever
Charging around after work or children can often focus eyes on the now and take them off the future.
In between job roles and juggling life, a pension can be left behind and not working for the long-term picture.
For someone born in 1985 they have probably accrued some pension since at least 2012 when auto-enrolment was introduced.
This does not take into account the effect on inflation on living costs which over time will likely increase that final income requirement. Therefore advice, planning and understanding is key.
Alright
We all hope to remain ‘young and run green’ so getting the above planned in good time makes a big difference for the long term. These steps cover protecting what you have as well as growing what you’re getting.
Taking professional advice to build a strategy can save time, costs and worry while making sure that your money is working for you while you are making the best of life.
There is always time for a coffee and conversation.
Content correct at time of writing.
[1]https://researchbriefings.files.parliament.uk/documents/CBP-7626/CBP-7626.pdf
[3]https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/divorce/bulletins/divorcesinenglandandwales/2022 & https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/divorce/bulletins/divorcesinenglandandwales/2023
[4] https://www.elitelawsolicitors.co.uk/prenuptial-agreement-uk/
[6] https://www.gov.uk/tax-free-childcare
[7] https://www.avtrinity.com/news/what-is-the-average-salary-in-the-uk-full-data-and-heatmap
[8] https://www.which.co.uk/money/pensions-and-retirement/starting-to-plan-your-retirement/how-much-will-you-need-to-retire-atu0z9k0lw3p
