Young people are finding it harder than ever to save money as dwindling disposable income and an inability to make use of savings accounts is hitting their trust in ‘big banks’.
Generational shifts in the way Brits handle their money are widening as 16-24-year-olds are the least likely to have any money in a savings account (46% vs. 81% of over-55s). Overall, 58% of the UK population feel it is much harder to save money in the modern day.
Further, three in ten (30%) young people say they haven’t had any financial education bestowed upon them by schools – again, the highest of any age group polled by Raisin.co.uk. This is compared to 81% of those aged 55+ who say they were taught how to save in school.
Regionally, Scotland (26%) topped the research for the most amount of people with no savings at all, while a quarter of residents in the North West and Yorkshire also revealed that they were unable to save.
When today’s older generation were in their 20’s and 30’s they said the thing they saved most for was holidays (45%) compared to just 36% of today. However, almost three-quarters of 16-24-year-olds don’t have any money put away for emergencies, yet a third (33%) are currently saving for a car.
This lack of financial education is exhibited by the £3.5bn sitting in young people’s current accounts that could easily be making more interest in a savings account.
Discussing the research Kevin Mountford, Raisin.co.uk CEO, commented: “From the research we can see that a lack of education and general awareness have left a large portion of the UK in a vulnerable position when it comes to their financial future, the current generational financial gap is at risk of leaving the younger generation behind. With over £3.5bn in Current Accounts that can still be invested and saved wisely, now is the time that consumers can make smarter choices to make their money work harder for their future. Saving even a little each month, but being smart about what types of accounts you save into, can make all the difference in helping to secure your financial future.”
It also seems young people are having to rely on money gifted to them (35%) or inherited from their parents (18%) and grandparents (17%) to get their feet on the savings ladder. A further 23% of this age group, nationally, say they have no savings whatsoever – yet, there is a hunger to both be better at saving (31%) and learn how to manage money better (30%).
Top Savings Tips
To help young savers make the most of their money we’ve created some helpful tips to ensure you can make small changes that will make a BIG difference to your financial future.
Start Saving at the Start of the Month
Sounds simple, but often squirrelling away money at the start of the month is more effective than trying to save whatever you have left at the end of the month. Setting yourself a target of £20-£25 as soon as you get paid will get you into the habit of saving regularly – plus your savings won’t be eaten up by any unexpected bills or surprises mid-month.
Getting into Good Habits
Getting used to saving on a regular basis can often be half the battle. Whether it’s saving for something that you want, or simply saving for the future, getting into a mindset of setting a savings goal can help work towards securing your financial future. Instead of taking credit for an item you want, try to save the money each month instead and pay for it outright.
Switch Your Current Account
Our research revealed that UK consumers have over £3.5bn sat in their Current Accounts. So it’s worth checking whether your account pays a high rate of interest and switch if it doesn’t – your money could be earning you interest from the day your wages are paid in.
Consider a Fixed Rate Account for Higher Interest
Fixed rate accounts tend to offer among the highest savings rates as you usually need to agree to leave your money untouched for a set period of time.
And the longer you agree to lock your money away for, the more interest you’re likely to earn.
The Raisin UK Savings Marketplace has a large selection of fixed-rate account to choose from – with periods ranging from 9 months to 5 years.