“ ONS statistics released today provide glimpses of positivity about the finances of the UK’s millennial generation, however, these glimpses are shrouded in an unenviable fog of limited savings and significant debt. The data shows 37% of young people now have financial debt compared to 49% between 2008-2010. While this is something to be pleased about, these figures do not include student loans, which a substantial proportion of this population will face.
“Meanwhile, more than half (53%) of 22-29 year olds had no money saved in a savings account or in an ISA between 2014 and 2016. While on the face of it this is worrying, the statistic doesn’t explore the fact that pensions auto-enrolment now means younger people are putting away money for a retirement, even if arguably at very low levels. Furthermore, the data suggest there is a strain between saving for later life and earning enough to be able to save in a more liquid manner. This lack of accessible savings could mean that any unexpected expense could push this group into a tricky financial situation which would then result in them having to enter into debt or being reliant on the Bank of Mum and Dad.
“The fact that homeownership among this generation has dropped by 10% since 2008 is really no surprise, as if savings have also dwindled people simply don’t have enough money for a deposit. Add this to a long period of steadily increasing house prices and you can see how difficult it is for young people to get a foot on the housing ladder, even if they are eating avocado on toast for breakfast.
“There could be some positivity on the horizon though, as this data comes from straight after financial crash, when borrowers found it much harder to get deals without a decent sized deposit. This situation is slowly starting to change and lenders are being more generous. However, house prices still remain high so unless there is significant drop in the property market we are unlikely to see a big boost in homeownership among the younger generations.
“Boosting the savings culture in the UK is of paramount importance. Younger generations need to have it instilled in them that having a healthy savings account is essential. Research shows that, like many behaviours, our attitudes to money are shaped at a young age. The Money Advice Service has shown that many key financial habits are set by the age of 7. Therefore its incredibly important that the government gives thorough consideration to the introduction of financial education onto the primary school curriculum. Doing so will help tackle financial illiteracy and show children early on the merits of saving, and hopefully avoid a situation where we find in another 10 years a generation of 18-29 year olds with even less in their savings accounts.”