Between the cost-of-living crisis, stagnant wage growth and an infamously competitive job market, it’s no secret that many young people in Britain are struggling to get on the road to financial security.
But a new study by the Yorkshire Building Society and Public First has shed light on the true extent of the problem, highlighting how millions of ‘Generation Z’ workers – those aged between 16 and 27 – are finding themselves unable to save anything at all.
Gen Z’s financial challenges
The sobering new research found that more than half (52%) of all Gen Zers in the UK haven’t managed to save any of their income at all in the last two years – but not for lack of trying.
Three quarters of those polled said they’d like to but simply can’t afford to, with snowballing outgoings meaning they need to spend their money on essential goods and services.
And not only that: 46% of respondents said they find themselves dipping into the savings they do have to afford their expenses at least once a month – nearly double the rate of the population at large (27%) and more than four times that of those over 55 (11%).
Most concerningly of all, almost a third (31%) admitted that if their monthly outgoings went up by just £100, they’d simply be unable to afford them.
What can young people do about it?
While the situation can seem disheartening – particularly with so many factors outside your control – that doesn’t mean all hope is lost.
In fact, there’s a number of proactive steps young people can begin taking today to get cracking putting money aside for the future.
If you’re having trouble getting the ball rolling with saving – or have a child in this situation – here’s where to start:
1. Get serious about budgeting
When money’s tight, every penny counts. So, it’s critical to keep track of your income and outgoings every month – that way, you’ll have a better idea of where it’s all going (and what, if anything, you can cut back on).
Set priorities, with essentials like rent, bills and food shopping first, followed by any savings and finally non-essential purchases. If you’re stuck, there’s plenty of apps and online tools that can help you.
2. Build up your ‘rainy day’ fund
Life can be unpredictable at the best of times, but when your disposal income’s thin on the ground it’s doubly crucial to keep some of your funds stashed away for emergency expenses.
You can start small: even little amounts regularly can build up over time. And you can even set up automatic transfers to your savings every month, so it happens without you having to think about it – or being tempted to spend it!
3. Deal with any debts
When you’re looking to start saving, the last thing you want is debt to derail you. So, focus on dealing with any high-interest debt like credit cards debt first; that’ll help you reduce the amount you owe in interest over time. You may also want to look into debt consolidation to make payments more manageable.
And it goes without saying that you should avoid taking on any new debt, especially for non-essential items.
4. Be mindful of ‘lifestyle inflation’
When the time comes you’re offered a raise or better job, make sure you’re not tempted to increase your spending alongside it!
If you’re used to spending less than you now earn each month, then living below your current means is a great way to leave income left over for saving and investing. And remember: it’s your responsibility to resist social pressures and focus on long-term goals, not short-term gain!
5. Educate yourself on financial matters
Take time to learn about personal finance – including investment, retirement planning and tax optimisation: it’s never time wasted, and you’ll thank yourself later.
There’s plenty of free resources online to get you started, including articles, courses and podcasts (not to mention endless YouTube videos!)
6. Invest wisely
Even small amounts can be invested regularly in low-cost index funds or Individual Savings Accounts (ISAs) – and over time, compound interest can significantly grow these investments.
If available, it’s always a good idea to take advantage of employer-sponsored pension schemes – particularly if your workplace offers matching contributions, as you’re essentially pocketing free money towards retirement.
7. Set clear, achievable goals
Knowing what you want is the first step to achieving it. So, whether it’s saving for a house deposit, paying off debt or building up an emergency fund, be clear in what you’re working towards.
Then, break these down into manageable steps so you can keep motivated and accountable – and make sure you’re reviewing and adjusting them regularly so you know where you stand.
*This information is for education purposes only – it does not constitute financial advice and should not be acted upon without taking professional advice.
If yourself or a loved one are looking to improve their financial situation, speaking to the experts can provide valuable clarity and peace of mind.
Get in touch below for a consultation on how we can help you meet your goals: