Are a younger generation of savers doing a better job than their parents? This question demands a composite response – namely, recent surveys have shown that while our youngsters are better at saving for their education, many are not recession proofing themselves. Now we will look at these points in detail.
Education is now key
A recent study from a chief financial institution has found younger people to be less money-orientated than the older generation. It also highlighted the fact that they tend to save for university now rather than for a car or home.
Interestingly, the study uncovered that more than a third of people over the age of 45 saved for a car when they were younger, compared with just 15% of young adults today.
And while it might not have made it onto the radar of their parents when they were younger, it seems that the new generation of savers are now looking to their future. Some 29% of younger people today are saving for university compared with just 6% of those over 45 who claim to have put money aside for their education.
But we could argue that these differences are largely down to the fact that people who went to university some 25 years ago would have had access to more government grants. This coupled with the fact that today, it will cost on average, £20,000 for somebody to undertake a three-year degree (that’s before we begin to consider the cost of living) In our opinion, this goes some way to explaining the findings.
But are younger people pre-empting the worst?
Research undertaken by the Institute for Public Research (IPPR) found that just a very small percentage of young people earning less than £21,000 have considered putting money aside in case of redundancy.
Participants of this study were asked whether they felt that their savings would see them through if they were to lose their job. Tellingly, more than a quarter (25%) said that they could live for more than a month, but no longer than three months. Perhaps more worryingly, 17% claimed they would only be able to survive for a matter of weeks, begging the question: should the government now be introducing measures to help younger people build up their assets?
What could be done?
While it would be easy to suggest that the new generation needs to save more, there is an argument to suggest that their options need to be made clearer. There are a number of fantastic products out there that are designed to help younger people save, but they need to be made aware of these.
From instant access savings accounts that offer a healthy rate of return, to ISAs from the likes of Santander and other leading organisations – there are financial products out there suited to this generation. The question is though, should they be switching bank accounts to something that would help them to save?
As a young person, if you’re unsure of your options, we suggest you speak with an experienced financial advisor who will discuss your options with you.