The case for young people to receive a better financial education has never been stronger. University education is no longer free, a job upon graduating is far from guaranteed, the housing ladder has been pulled up for many and predictable workbased pensions are a thing of the past.
Yet a survey of 440 young people aged 18 to 25, by the Centre for the Study of Financial Innovation, found that 64% had not had any formal financial education.
Other findings in a report entitled “Generation Y: the (modern) world of personal finance”, by the CSFI’s Sophie Robson (aged 26), include:
Nearly all still visit their bank branch at least occasionally.
Nearly three-quarters have never used mobile banking – and many of those
are worried about security considerations.
Many don’t really consider student debt to be debt at all – apparently,
because it is taken directly from their gross pay.
Most are virtuous – nearly two thirds pay off credit and store card debt within a month to avoid interest payments.
Women generally tend to have lower savings than men and are less likely to take investment risks.
More than four in 10 of those who contribute to a pension do not know what type of pension they have – money purchase, final salary etc.
Respondents also tended to have a traditional attitude to home ownership – 71% said buying a house or flat was “very important”. But they were (surely) over- optimistic about when this might happen: 41% expected to buy in their 20s, and only 10% thought they might have to wait until their 40s. (The average age of first-time buyers, according to various surveys, is in the mid to late 30s.)
The report is also based on 17 (unstructured) essays by young people on their attitudes to personal finance. On personal debt, one said: “As far as I’ve ever been concerned, debt is debt. It’s always bad.” But another pointed to the liabilities for others that generation Y will shoulder: “I’m quite terrified about the monstrous unfunded pension liabilities that my generation will be lumbered with.”
And on financial literacy: “I think banks can rely on a lack of understanding from most of their customers who miss important clauses in contracts.”
Summing up the need to combat this, one said: “Improving financial literacy among consumers would increase confidence in financial services and managing money; there would be less of the fear which surrounds money and personal finance.”
One encouraging (and surprising) note for the financial services industry is that more than half of the young people surveyed find personal finance “interesting”.
The challenge for the industry is, therefore, to persuade young people that they can use its products and services with confidence and to help those at the beginning of their working lives to develop better financial habits.
Read the full report from the link below:
Click to access Generation_Y_by_Sophie_Robson_WEB.pdf
For more information, contact:
Sophie Robson, 020 7493 0173, or sophie@csfi.org
Jane Fuller, 07980 305 278, or jane@fulleranalysis.com
Andrew Hilton, 020 7493 0173 or andrew@economic-evaluation.com
The CSFI is a not-for-profit think-tank, set up in 1993, which looks at emerging threats and opportunities in the financial services sector. Chaired by Sir Brian Pearse, it is supported by around 70 public and private-sector organisations.
CSFI
5 Derby St
London
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020 7493 0173
