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News: The shape of future spending?

A new report from MINT - the Royal Bank of Scotland financial services company - predicts big changes to UK spending patterns over the next 20 years.

Future expenditure will be driven by a significant rise in single occupancy households, an ageing population and a change in the traditional ideals of the family as is known today. All of these changes will come at a cost.

2025 will herald hefty fees for anyone with a vice as the price of a packet of cigarettes will exceed £8 and a pint of beer cost over £4. Despite this, the proportion of money we spend on basic foods such as bread and milk will decrease, as these become cheaper in comparison.

As birth rates continue to decline and the average lifetime expectancy lengthens, families will become vertical. The long established view that typical family life has included aunts, uncles and cousins (horizontal relatives), is to be turned on its head. As society moves forward these family members will be replaced by an increased number of living generations in existence at any one time.

In future it will become common place for three or four generations to be an integral part of this evolving family structure. This change is also perpetuated by the advent of 'boomerangers', grown up children who leave the parental home and then return due to the burden of student debt and high property prices.

At the same time the current trend for delayed first marriage and rising divorce rates, which has fuelled significant growth in single person households, is fully expected to continue over the next two decades.

Single occupancy has grown from 11% in 1961 to 30% today and by 2021 35% of the nation is expected to be living alone. Therefore with housing costs continuing to rise in the future we will see an even greater demand for affordable properties and disposable housing (flat-pack housing, module housing and pre-fabricated properties which are already being developed in London & the South East).

For those not choosing solo living, financial decisions are set to become a more democratic affair. At present, men still claim to take responsibility for major financial decisions in 25% of relationships, compared to just 17% of women. But by 2015 women will be just as likely to have the final financial say and the vast majority (80%) of couples will share decision-making.

Democratic decision-making will further extend to involve every member of the household. Dinner-table discussions already include children in a wide range of financial decisions from choosing the annual holiday to deciding on new technology for the home. This rise in "professional parenting" has been characterised by a growing awareness of childrens' developmental and educational needs and suggests that over time the role children play in family finances will become even more valuable.

So how will these trends affect spending patterns? Certainly, according to MINT, the British obsession with bricks and mortar shows no sign of abating with property featuring heavily in the top areas of increased spending in 2025. Along with the rise in disposable housing, the country will also see a growth in the ownership of second homes as many of us seek to become property barons.

Meanwhile, as household incomes are expected to rise and prices continue to fall for many basics, including clothing and household durables, the proportion of spending on non-essentials such as domestic services, luxury foods, travel and cultural pursuits is predicted to increase.

Forecasts also suggest the number of people over-75 will grow by 40% in the next twenty years and, to reflect this, spending will increase on healthcare services: insurances, treatments, alternative therapies and healthy foods.

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