Money is, and has always been, a polarising topic – and we rarely take the time to develop our financial literacy.
Young people, in particular, may be tempted to think they have plenty of time to figure out their personal finances, and should make the most of living free from financial responsibilities while they can. However, statistics show that those aged 18 to 25 are at a great disadvantage when it comes to financial literacy and informed decision-making.
Battling the cost of living crisis
Young people today see themselves as battling a cost-of-living crisis, navigating student debt and an unstable job market. Research shows that, despite making the right financial choices, such as saving more than older demographics, 47% of young people still have low levels of financial resilience. One of the driving reasons behind this is that young people, on average, spend twice as much on essentials including rent and bills than those aged 51 and over.
Sustainable money habits do not develop overnight – and unfortunately, learning often comes through trial and error. Taking the first steps can be daunting. With an abundance of (mis)information out there, it can be tough to know where to start.
Often, the idea of budgeting is a first port of call – but the word can have a negative connotation; being ‘on a budget’ implies funds are already tight. But it isn’t just about the amount of money available, it’s about planning and self-control.
Another recurring theme in the conversation around finance is the negative stereotype perpetuated across the media of young people spending frivolously on drinking, takeaways and online shopping, or relying on parents for financial support.
We need systemic change to address how we talk with and educate young people about money.
Take-homes and learning
Recruited via The Young Foundation’s Kickstart Scheme, we sought to build a greater understanding of what money means to young adults – and what is needed to strengthen the financial capability of the UK’s younger generation. As young social researchers, we had the opportunity to deepen our understanding of ethics and responsibility, exploring a sensitive and possibly divisive topic. We wanted to try out new, engaging interview techniques, and create a report that is digestible for a variety of audiences.
Our participants conveyed the urgency with which young people need to learn personal finance skills, and described how the current curriculum leaves them ill-equipped for the transition to greater independence and responsibility later in life.
Housing is another central theme. Our participants reported their struggles in getting onto the property ladder. Those living in London described this as a distant future goal. Even those living in other UK regions commented that property prices in the capital are “extortionate”, and recognised this puts young people in an unfortunate situation, especially when coupled with student debt, entry-level salaries, and meager opportunities to build credit score.
By grouping together common themes in our participants’ accounts, we developed an understanding of the things that matter to young people in relation to money. At the same time, we revealed many areas that past research has failed to address, and in which we feel there is scope for young people to be heard more.
One is around community. How do socioeconomic factors shape young individuals’ perceptions of money and finance? For example, one of our participants said their understanding and views on certain financial concepts, such as interest, were heavily influenced by their faith.
Another topic worth further exploration is how young people who have moved to the UK navigate the financial practices here. One of our participants shared their difficulties acclimatising to the UK’s financial system, which was echoed by one of the peer researchers in this study.
Finally, young people reported a lack of opportunities to improve their financial and professional outcomes.
These are key issues for young people in the UK today. Money may be a difficult topic of conversation, but to build a greater understanding, and to deliver vital support and information, it’s one we mustn’t shy away from.
Abigail Letch, Casper Essam, Ellen Goddard and Jack Palmer-Pinfold – the peer researchers who developed this project and co-wrote this blog – were recruited through the government’s Kickstart Scheme. They all have recent experience of navigating the economic climate and employment scene as young adults, turning their lived experiences into expertise.