The FCA recently published its largest ever consumer and finance tracking survey, Financial Lives, which looked at the finances of nearly 13,000 people around the UK. Grovelands published our summary of this survey recently, but now we’re looking into the findings in more detail, in particular, what the survey says about young people’s financial habits.
What do the financial lives of young people look like?
The youngest age range surveyed was 18-24-year olds, and this category, along with the older generations, had the most interesting statistics.
Unsurprisingly, at the time of the survey, 35% of the 18-24-year olds are still living at home rent-free with family, 49% are in rented accommodation, and most are in full time work (65%). A further 24% are in full time education, and almost all of them have current accounts (92%).
Times are changing, and just a few decades ago, people in their late teens and early twenties would be getting married and buying their own homes, yet nowadays, this age category has the lowest earned income out of all the age groups, and less than 5% of them have married or purchased a home.
The number of students in full time education has increased from 68,000 in 1980, to 500,000 in 2017, so young people are prolonging their start into full-time work, and this is reflected in their financial situations.
Financial struggle for young people
While over half of 18-24-year olds (55%) have savings accounts, a worrying 55% also have debts, and 41% describe themselves financially as just about surviving, while a further 11% are already in financial difficulty.
The 18-24-year olds had the most unsecured debt out of any age group, however this does include student loans. Yet, on top of this, 29% have been in their overdrafts in the last year, 10% are still in their overdrafts, and 12% are relying on informal loans from friends and family. These are concerning figures for our country’s young people.
What can firms do to help?
The FCA is concerned with helping the financial situations of UK citizens, so it has recently published its Mission, where it describes ways firms are expected to improve their financial service offerings.
The research indicates that 18-24-year olds could do with more information and education surrounding their finances, with this age group rating themselves lowest on their financial knowledge.
Of the youngsters surveyed, only 19% said they knew how to choose a pension package, and 18% knew enough about mortgages. In addition, one in three said that they’d rather live for today than plan for tomorrow, and 56% said that they would be fine choosing a pension by themselves, yet didn’t actually have one in place, indicating that there is some overconfidence which could potentially result in financial risk.
Worryingly, a huge 42% of all UK adults surveyed have no confidence in financial services, and 18-24-year olds, at 44%, are even more suspicious. This could be a great opportunity for firms to prove the public wrong by improving their reputation and offering some much-needed financial education to the younger age group.
Keep your eyes on our blog for the next Financial Lives post due in February, which will look at how older generations deal with their finances.