In the UK, many young people find themselves in a financially precarious position, which highlights just how important it is for them to focus on financial wellbeing early in life.
Financial security feels like a distant hope for many young people in the UK. According to a survey of 16- to 24-year-olds in the country conducted in January last year, almost half of young people in work are facing ‘financial precarity’.
The
survey, conducted by the Royal Society for Arts, Manufactures and Commerce (RSA), defined this precarity as a lack of confidence in ‘maintaining a decent quality of life, now and in the future, given their economic and financial circumstances’.
For example, one in five young people in work in the UK aren’t always able to meet their basic living costs because their incomes vary from one month to the next. Fully one third feel that their work doesn’t pay them enough to maintain a decent standard of living.
One of the consequences of this is that as young people grow older, they are more likely to be in debt. Equally, they are likely to save less.
A downward trend
One of the notable things about the survey findings is that this financial precarity is getting worse as young people get older. While only 38% of 16- to 18-year-olds are in a precarious financial situation, this increases to 48% for 19- to 21-year-olds and 57% for 22- to 24-year-olds.
‘Young people’s financial security – in terms of their debt and savings – also changes as they get older,’ the study noted. ‘There is an upward trend in the proportion of young people in debt as they get older, with 80% of 22- to 24-year-olds owing money for something.’
This is a significant finding when coupled with 2021
research from charity Citizens Advice that found that 45% of 18- to 34-year-olds took on ‘buy now pay later’ debt in the past year, which is mostly used for electronics, clothing and white goods. The study also found that four in ten people who have used buy now pay later are struggling to meet the repayments.
Furthermore, Citizens Advice noted that advertising of buy now pay later offers are mostly targeted towards young people. And these adverts ‘can encourage people to spend money on things that are unaffordable’.
Broader impacts
This is all particularly sobering because of what this all means for the wellbeing of young people who feel financially insecure.
‘Young people who are currently experiencing financial precarity are more likely to feel worried about every area we asked about – their financial, housing and employment situations, their physical and mental health, and their future – than those who are financially comfortable,’ the RSA study noted.
This shows just how pervasive the effects of this anxiety is. When young people feel that they are in a financially precarious situation, it has impacts across their entire lives.
Consequently, it highlights how important it is for young people to focus on their financial wellbeing from as early an age as possible. Those who feel that they have a hold on their finances are more likely to feel confident about their lives overall.
Why financial wellbeing matters
Taking financial wellbeing seriously from a young age implies building strong foundations for the rest of one’s life. By establishing a healthy relationship with money early, one can avoid common pitfalls, manage debt better, save more effectively and spend more responsibly.
An important aspect of financial wellbeing is that it also involves setting long-term financial goals. This not only fosters a sense of purpose and direction, but also helps to move one’s focus away from the constant demands of spending on things in the short term.
Establishing and growing one’s financial knowledge is also empowering. There is immense value in financial independence and self-sufficiency, particularly if you can align your spending with your values and goals.
Finally, for young people who inevitably face big life transitions such as finding a partner and starting a family, having the knowledge and confidence to navigate these changes is vital. Appreciating how important it is to find a partner who shares your financial values should also not be underestimated.
None of these things are simple to achieve. They require the right mindset. Which is why appreciating the value of financial wellbeing, and making a concerted effort to have a positive relationship with money should be an important early goal for everyone.
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