Being money savvy is necessary, but not cool, say millennials
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In a recent survey from the government-led Money Advice Service, it was a common held view amongst 16-25 year olds that it was considered ‘boring’ to be good at money management and having a social life was considered to be more important.
However, the good news is that this group of young people do understand the importance of organising and managing their finances. According to the survey, the biggest barriers seem to be the lack of financial education within schools and the uncertainty of where to go for money advice.
What is the financial outlook for most millennials?
In this current climate, it is understandable that the young people of today have a very pessimistic outlook when it comes to future financial planning.
This generation face a very different financial future from that of their parents; they will not receive generous pension plans, accumulating property wealth will be tougher, if not impossible in the medium term, and student debt has to be paid for decades, with the average student owing at least £40,000 on graduation.
The ‘doomed before we’ve started’ view might deter these youngsters from sitting down and working out their medium and long term finances.
Tackling the obstacles, one by one
But as with all financial planning regardless of age, having a plan and tackling each element step by step is key.
Knowing what your goals are can help shape your decisions on the immediate future – whether they are about further education, careers, living arrangements or lifestyle. The earlier you start saving, the more control you can have over your future.
Grasping onto the property ladder
Getting on the property ladder is the top priority for many millennials. Not only does it provide independence but it is a vital part of financial planning and gives you the opportunity to accumulate assets.
According to a report from the Chartered Insurance Institute, it takes 24 years on average to save a deposit for a home, which is dramatic increase from 1997 when the figure was just three years, so starting early is more important than ever.
Retirement planning – it’s never too early
With the days of the final salary pensions schemes well and truly over, and the limited possibility of building up wealth through the property ladder, millennials must not forget their retirement savings.
With recent figures from the Office of National Statistics (ONS) showing that the average retired household spends just over £21,000 per year, it is important to start investing a percentage of your salary each month as soon as you enter full time employment.
The introduction of auto-enrolment has helped with this but knowing the figures can help. To reach a retirement pot of £20k, a 25 year will need to be saving just under £250 per month. If you delay setting up a pension, this figure rises to £4oo per month at 35 and over £800 at 45 years.
How can we help?
As fully qualified financial advisors, we are always happy to help review your current financial situation and advise on how you can plan for the future. The initial consultation is always free.
If you would like to talk to one of our expert Advisors, call now on 01892 300303, or for more information on how we can help you, visit our website www.prosperityifa.com.