Money concerns are a big worry for the millennial generation as they make plans for life milestones. But what areas can they improve to reach financial resilience?
Money concerns are harming the millennial generation’s ability to plan for the future due to poor finance education in schools, new research from Samuel & Co Trading has revealed.
Despite calls for financial education to be taught in schools alongside other core subjects, it is yet to be added to the curriculum. As a result, there is a high chance that young adults who are taking their first steps on the housing ladder, starting families, and planning for retirement are feeling put on the back foot when they look at their finances.
The research questioned 1,000 British citizens to discover the problems they have with understanding basic finance. It revealed seven money worries for the millennial generation.
1. Saving for unexpected costs
Life throws frequent obstacles at families, including those that require money to smooth over. From the boiler breaking down to being unexpectedly made redundant, as well as illness, injury, or even death, there are many instances where having a financial buffer can help. We all know we should have some money put aside to cover unexpected outgoings. However, the study found that it’s a safeguard many millennials are missing.
According to the survey results, more than two in five (43%) Brits aged between 18 and 24 do not have any savings at all to cover unexpected costs. Whether you recognise your financial situation in that statistic, your children’s or even your grandchildren’s, not having the money to cover unexpected costs can push people into debt, harm their lifestyle, and cause unnecessary stress. Building up a savings account that is there should they ever need it can give millennials peace of mind.
2. Planning for the future
The survey found a lack of financial planning for the future was an issue that affected individuals of all ages. When asked if they had a five-year financial plan, 77% of women and 47% of men admitted that they didn’t.
For the millennial generation, a five-year plan is likely to focus on getting on the housing ladder but should include other areas too, such as beginning to build up wealth through a LISA or Workplace Pension. Armed with a plan and financial goals for the next five years, you are far more likely to be in a better position over the long-term.
3. Understanding pension and tax outgoings
Some 78% of women revealed they did not know how much they paid into their pension every month and 35% didn’t know how much tax they paid. The survey found that half of the men questioned were not sure of their pension contributions and 45% did not know the amount of tax they paid out of each pay cheque.
With auto-enrolment meaning the majority of millennials will now be paying into a pension, it’s vital to understand salary outgoings that are applied to each payslip. Taking the time to review pension contributions and understand the income they’ll provide for your financial future can help set you on the right path financially.
4. Confidence managing money
Across survey participants, it was found that many Brits do not feel confident managing their money. In fact, a lack of financial knowledge has led to a quarter of women feeling ill at ease when considering their money and 14% of men feel the same. With money concerns having implications across numerous areas, including health and mental wellbeing, taking steps to improve knowledge of the most common areas can have a hugely positive impact.
With a greater level of confidence when managing money, you will be in a better position to take control of your finances and ensure your actions reflect longer-term aims.
5. Knowledge of credit cards
Credit cards are a commonly used way to access credit when you need it. They’re often used as a way to make big-ticket purchases, cover unexpected outgoings, and build up a positive credit rating.
Yet, despite this, 28% of women and 21% of men stated they did not understand the terms and conditions of their personal account.
Getting the most out of a credit card and minimising charges placed on purchases and balance transfers means it is important to understand the finer details. While reading terms and conditions can seem like a daunting task, it is one that should be considered critical.
6. Getting to grips with financial vocabulary
If financial jargon leaves you feeling confused, you’re not alone. Six in 10 women and 38% of men, stated during the survey that they didn’t understand financial vocabulary. It is a lack of knowledge that can hinder their confidence and ability to order their finances in a way that suits their lifestyle and plans.
Working with a professional that explains finance matters in a clear, transparent way can help you get to grips with your money. Understanding the most commonly used finance vocabulary will have a positive influence on the other common money worries millennials face too, from understanding the terms of a credit card to feeling confident on financial matters.
To gain a better understanding of your own finances or to help your child or grandchild plan their financial future, please get in touch with us.
