Millennials are the generation born between the mid-80s and early-2000s, perhaps your children or grandchildren. With 13.8 million people falling within the age bracket, they make up a significant 12% of the UK population (source: Statista).
In financial terms, millennials have been dubbed ‘generation debt’, ‘generation rent’ and even ‘generation screwed’, due to the difficulties they face in comparison to the generations who came before.
Despite the negative coverage, new research suggests that 20-34-year olds are actually saving more each year than their parent’s generation. But, almost half are confused about the marketplace and need more guidance.
Millennial attitudes toward savings
44% confess to being confused about savings and feel that they would benefit from advice (Source: Close Brothers and the Pensions and Lifetime Savings Association (PLSA)). This is emphasised by the attitude of millennials to the new Lifetime ISA (LISA):
- Just 4% of millennials have a Lifetime ISA (LISA)
- 32% say they are likely to open one in the future
- 41% of millennials don’t know if they will open one
- 64% of those who are unsure cite a lack of information as the cause of their uncertainty
Of those who are likely to open a LISA in the future:
- 69% will have it as a complimentary account to their workplace pension
- 18% will choose to opt out of their workplace pension and rely solely on the LISA
Overall, the study showed that millennials are saving almost £400 more each year than ‘Gen X’-ers (35-54-year-olds) at £3,445 to £3,073, despite the cry for more advice and guidance. However, the higher amounts are not necessarily being used in the most sensible of ways. Millennials will put their savings toward:
- Holidays (34%)
- House purchases (33%)
- Paying debts (25%)
- Big ticket items (13%)
With short-term plans taking priority over long-term savings, the millennial generation could be headed for financial uncertainty in later life. Just one-fifth (20%) are currently saving to support their lifestyle in retirement, compared to Generation X at 34% and 50% of over-55s.
Why engage with saving?
Engaging with saving allows you to take control of your financial future. With the struggles facing the millennial generation, it is now more important than ever to know what’s what regarding savings. Understanding savings will improve your outlook toward:
Buying a house: With rising house prices come bigger deposits. Knowing how much you can save and when you will have enough means you can plan your future more efficiently.
Saving for retirement: From early 2018, all employees earning £10,000 per year or more will be automatically enrolled into their workplace pension. Understanding how much both you and your employer will contribute, and the income this will produce in retirement, puts you in a better position to plan your financial future.
Pensions: It is no longer possible to rely on the State Pension alone to support your lifestyle in retirement. Therefore, developing good savings habits now, will allow you to build a fund to live on when you choose to stop working. This is especially important if you want to retire prior to the ever-increasing State Pension Age.
Where to get guidance and advice
If you feel that information will help you to understand your saving options better, there are a range of sources available. Of course, some will be more beneficial than others. Some great sources of information are:
- Financial advisers and planners (advice)
Naturally, Independent Financial Advisers are best placed to offer personalised advice which is tailored to suit your current and future objectives. While advisers do charge fees for their service, it has been shown that people who seek independent financial advice are significantly better off and more confident than those who do not.
- Government information (Guidance)
The Government website has lots of information about products, services and legislation which affects your finances. It is a good source of unbiased information, though it is not tailored to your needs. Pension Wise is another government-run service which focuses on pensions. The website has lots of articles and information about saving and preparing for your future.
- Online information
Although it is classed as guidance rather than advice, there are many websites and groups offering general information on all aspects of finances, including savings, including:
Of course, we are always ready to help with any concerns you have surrounding savings and finance, so feel free to contact us.