Young Money - Adviser Home

Young Money
July 2012
1
Contents
3Introduction
4
Chapter 1
Quick and easy money
8
Chapter 2
There’s no place like home?
11
Chapter 3
UK pensions – are they Greek to young adults?
14
Chapter 4
Spending into the future
17
Chapter 5
Banking on their reputation
20Conclusion
21Biogs
2
July 2012
Introduction
A report that will, by turns, inform,
inspire confidence, provoke debate
and disturb…
Money, money, money: they say it
can’t buy happiness and often costs
too much – but it makes the world go
round. Whether or not the old clichés
are true, money (or lack of it) certainly
plays a role in all our daily lives. But
careful financial planning is arguably
most important for the age group
that generally doesn’t have much of
the green stuff – twentysomethings
who are near the beginning of their
lives as both earners and consumers.
So we wanted to investigate the
way Britons in their 20s view the
financial opportunities and threats
they face. How good, for example, is
their knowledge of pensions? When
do they envisage owning their own
property, if ever? And where do they
turn to make ends meet – a bank, a
payday loan company or even the
black market?
July 2012
We sought to probe how well this
key demographic is being catered
for by the financial services industry.
Are banks and mortgage companies
as helpful as they can be to young
people, for example? Do they respond
to their needs and questions? And
if not, how can financial services
businesses make things easier for
Britain’s young adults?
We quizzed young people from across
the country and gathered together a
team of twentysomething financial
experts in the form of Iona Bain, Katie
Morley and Gareth Shaw (see page
21 for biographies), to bring sharp
analysis into the picture.
Yet, some of the findings in this
report are truly disturbing – in
chapter one, we found significant
evidence of young people turning to
crime to fund their lifestyles.
Whether you yourself are a young
adult, whether you have young
friends or whether you are employed
in the financial services sector, we
are sure you will find this report
informative, thought-provoking and
useful. Moreover, we hope it will start
a debate about the changes that
need to take place to equip young
British adults better for the financial
challenges ahead.
MRM
Some of our findings are to be
expected – for example, we expose
the parlous levels of understanding
of pensions among our young people
in chapter three.
3
Chapter 1
Quick and easy money –
how far would you go?
Sometimes the car needs petrol or a stylish jacket catches the eye. At other times,
more worrying needs can be at play, such as appeasing creditors, paying household
bills or ensuring the rent is paid on time. Whatever the cause, virtually all young people
have wished they had more disposable cash.
There are many routes to quick money in today’s economy. Some involve mainstream
solutions, like the bank, credit card or the payday loan company. Others are
unconventional – and some are illegal.
We wanted to probe the lengths to which people were prepared to go to in order
to get their hands on some cash. To do this we proposed a range of actions people
might take – from the conventional to the controversial to the illegal – and asked
twentysomethings whether they knew of anyone also in their 20s who had done those
things to raise money.
The credit hunters
While they are undeniably controversial, payday loans are certainly mainstream,
appearing regularly in TV, magazine and online advertising. These short-term loans,
secured against a customer’s next pay packet, are certainly well-known to young
adults. Nearly one in every five (19%) of our respondents knew of someone in their 20s
who had taken out a payday loan.
This is almost the same number – 20% – who reported knowing of someone in their
age group who had turned to their family for money. And it is not far off the proportion
who said they knew of a twentysomething who had taken out a loan through a bank
(29%) or a credit card (34%) to obtain funds.
“Large swathes of society have come to see borrowing as a quick-fix solution which
suits payday lenders down to the ground – they have stealthily increased their
advertising budgets and invaded social networks in a bid to target the Facebook
generation. Most of us do not realise what the ruinous consequences of this could be.”
Iona Bain, young money blogger
4
July 2012
Chapter 1
Quick and easy money – how far would you go? cont’d
“Payday loans companies have barged
their way into the mainstream and it’s
not uncommon now for people to be
relying on them not just when they’re
short on cash, but when they need to
buy essentials like food, nappies and
petrol. There’s a huge temptation for the
consumers that are using these quick
and easy loans to keep going back for
more, especially if they’ve never had
access to credit in the past. Parts of the
payday loan industry feeds off this new
world of easy – some recent research
shows that some 23% of lenders don’t
even carry out credit checks on potential
borrowers. People are getting caught up
in a debt trap, whacked with high penalty
charges, or encouraged to roll over
payments and take out more loans at
inflated rates.”
Do you know of anyone currently in their 20s who has done the following in
order to cover their expenses or make more money?
Taken out a credit card
29
34
Taken out a loan
through a bank
%
20
19
Taken out a payday loan
Taken out an interest-free loan
from family with the intention
of paying it back
Gareth Shaw, Which? Money
July 2012
5
Chapter 1
Quick and easy money – how far would you go? cont’d
The forfeiters
There are those who will look beyond
conventional financial services or family
and turn the spotlight on themselves in
the search for cash. We found evidence
of people prepared to forfeit image and,
potentially, health to make ends meet.
Some 3% of our survey group said they
knew of a man or woman in their 20s who
had sold their hair in order to balance
the books. Odd though it might seem to
commoditise your own hair, doing so is
unlikely to affect your physical wellbeing.
Skipping meals, on the other hand,
certainly could – and more than a fifth
(22%) of our respondents said they knew
of someone in their 20s who had gone
without food in order to cover expenses or
make money.
The illicit cash seekers
When times get tough, a considerable
proportion of the nation’s
twentysomethings are apparently
prepared to dabble in sex, drugs and
crime. While a comparatively low one
in 25 (4%) of our survey group knew of
someone of their age who had committed
insurance fraud to cover their expenses,
twice that proportion (8%) knew of
twentysomethings who had become
involved in the sex industry – either
through prostitution, glamour modelling,
escorting, lap-dancing or stripping.
6
CASE STUDY
Steve Perry, author of “When Pay Day Loans Go Wrong”
“Two years ago, my reluctance to miss out on a short break with friends, and
my near-blacklisted credit rating, pushed me to take out a £250 payday loan.
When I was unable to repay this on time, I foolishly took out another payday loan
to meet the original charges for repayment. This vicious cycle of borrowing at
extortionate rates spiralled into a near £22,000 repayment, after borrowing
from a dozen lenders 64 times in 18 months.
“Thousands of pounds of dead money later and such high levels of stress that I’m
not sure how I managed to survive, I finally broke free by defaulting. If the payday
lending system should continue to be used within the United Kingdom, then an
independent specific regulator must be brought in to control the actions of loan
companies who are clearly unable to control themselves.”
Do you know of anyone currently in their 20s who has done the following
in order to cover their expenses or make more money?
25
20
15
22%
10
3%
5
0
Gone without food
Sold hair
July 2012
Chapter 1
Quick and easy money – how far would you go? cont’d
Although much of the sex industry is not illegal, illicit drug dealing unequivocally is. Yet,
one in every 10 of our survey group said they knew someone in their 20s who had sold
drugs to make ends meet.
“Clearly, many young people feel they have to resort to desperate and tawdry
measures in order to get by, as their housing, education and employment prospects
have rapidly deteriorated in recent years. If we let impoverished young people drift
into debt, drug dealing and the sex industry in order to survive, we will have, financially
AND morally, a lost generation on our hands.”
Top 5 Payday Loans
Payday UK APR 1737%
QuickQuid APR 1734%
Wonga.com APR 4214%
Payday Express APR 1737.2%
KwikCash
Iona Bain, young money blogger
APR 1737%
UK Payday Today APR 1737%
Source moneysupermarket.com.
Do you know of anyone currently in their 20s who has done the following
in order to cover their expenses or make more money?
Information based on payday loan of
£100 on 11 June 2012
10
8
10%
6
8%
Did you know?
Intent to supply Class C drugs
carries a prison sentence of 14
years, or an unlimited fine.
4
Source Direct.gov.uk
2
4%
0
Faked an insurance
claim eg claimed for
stolen item when
not stolen
July 2012
Involved in sex industry
Involved in drug dealing
eg prostitution, escort
service, glamour modelling,
lap dancing/stripping etc
7
Chapter 2
There’s no place like home?
For many, buying a home is the most important purchase they will ever make.
Yet, today’s twentysomethings are facing an increasingly tough challenge to access
the property ladder as lenders demand ever larger deposits and lending criteria
become increasingly strict.
Some 41% of our survey group said they owned their own home, compared to 59%
who didn’t.
We asked our non-homeowners about the perceived hurdles for today’s young adults
as they looked to get a foot on the property ladder.
Economic obstacles
Perhaps unsurprisingly in today’s economic climate, financial struggles or concerns
appear to play an important role in affecting twentysomethings’ feelings. Nine out
every 20 of our survey group (45%) said they will never have enough money to buy a
home – with 25-29 year olds much less likely to expect to be able to buy a property
than those in their early 20s (54% and 38% respectively). Non-graduates in their 20s
are also more likely than graduates to think they’ll never be able to afford a home (54%
compared to 37% respectively).
The UK’s growing unemployment figures might also be weighing heavy on the minds of
our young adults. More than a third (38%) said that they have little job security which
makes it difficult to them to buy a home.
One in seven (14%) of young people are of the opinion that owning a property is
actually a poor investment – with people in their early 20s most likely to believe
this. Almost 1 in 5 (18%) of 20-24 year olds look negatively on a home’s investment
potential, compared to 10% of those aged 25-29.
“Although many landlords play fair, renting is just as onerous a commitment as a
mortgage. At least the latter can be paid off one day - there is no end in sight with
renting, and it’s creating a classic Catch 22 scenario.”
Iona Bain, young money blogger
8
July 2012
Chapter 2
There’s no place like home? cont’d
“We’re obsessed with buying property in the UK, but not enough people consider the
alternative of remaining a long-term tenant. If you approach it in a prudent way – by
taking the savings you make by renting rather than paying mortgage costs, stamp
duty and maintenance costs, and reinvesting them into a decent savings account, you
could end up with a huge cash nest egg rather than one built from bricks and mortar.”
Gareth Shaw, Which? Money
Social barriers: unable – or unwilling – to fly the nest
One in seven (14%) of our twentysomethings don’t want to be tied down to a property.
This was a particularly prevalent sentiment among graduates – with almost a fifth
(19%) stating this, compared to just over one in ten (11%) non-graduates.
Did you know?
The typical monthly cost of buying
a three bedroom house in the UK
was £600 in December 2011: £116
(or 16%) lower than the average
monthly rent of £716 paid on the
same property type.
Source: Halifax
It appears that, for some, flying the family nest is an improbable goal. One in ten (10%)
plan to stay at home and live with their parents rather than purchase a property.
Mind the (knowledge) gap
Buying a home for many is a complex process, but for more than a third of
twentysomethings, the technicalities involved with buying a home could be a serious
stumbling block to home ownership. Some 35% of our 20-29-year-olds said they did
not understand what buying a home involved.
Those in their 20s who hold a degree tend to have a better understanding of the
property market – almost four in 10 non-graduates (39%) compared to 28% of
graduates don’t understand what buying a home involves.
Where next?
There are clearly two key issues for young adults in their 20s when it comes to firsttime homeownership. The first is affordability with a significant amount of young
people feeling they won’t have enough money to buy a home amid worries about
job security and fears that property isn’t worth investing in. The second is a lack of
understanding around what buying a home involves.
The solutions, therefore, seem to be around clarity and innovation. The mortgage
industry, the survey suggests, not only needs to explain its products and services
better but it needs to come forward with propositions that address affordability,
such as shared equity and shared ownership deals.
July 2012
9
Chapter 2
There’s no place like home? cont’d
“There are more innovative deals coming to the market, giving younger consumers
the opportunity to share the burden with their family. But for many, this may be an
undesirable option – having put you through university, do you want to go back and
ask for more to buy a house?”
Gareth Shaw, Which? Money
“Young people will feel the pain of not being homeowners most when they are old. This
is because the major downside of not being a homeowner is you will never be freed
from the burden of paying rent – and getting onto the property ladder late in life may
mean having to pay off a mortgage well into retirement. This will make people in this
situation significantly poorer when they become pensioners, and in the worst case
scenarios, may delay or prevent today’s youth from being able to retire.”
Katie Morley, Pensions Week
Percentage of young people that agree with the associated statements
50
40
45%
30
35%
14%
20
10%
38%
14%
10
0
10
I don’t think I’ll
ever have
enough
money to buy
a home
Owning a
home is a
poor investment
I plan to stay
at home and
live with my
parents
I don’t want to
be tied down
to a property
I don’t understand what
buying a
home
involves
I have little
job security
which makes
it difficult to
buy a home
July 2012
Chapter 3
UK pensions –
are they Greek to young adults?
Saddled with student debt, battling to raise increasingly high mortgage deposits
and choosing marriage and families later in life, many twentysomethings have very
different priorities to those of their counterparts in previous decades.
At the same time, messages about the importance of having a pension seem not to be
resonating with the majority. According to the Office of National Statistics [Annual
Survey of Hours and Earnings, 2010], for example, only 34% of men and 38% of
women in their 20s are members of an employer pension scheme.
“The UK has a culture of financial immediacy – we want our spending to have an
instant impact on our lives, and placing money into something that can’t be touched
for 40 years seems like too big a commitment to make. Even if the desire is there,
the affordability is not – we’re an environment of static payrises and high inflation,
meaning that even if you want to put some aside for the future, the sacrifice may just
be too big to cope with.”
Gareth Shaw, Which? Money
Other chapters in this report focus on the financial challenges and opportunities that
might push pensions back on the priority lists of young adults. Indeed, we reveal in
chapter four that our survey group believed they would need to earn at least £25,769
before they began contributing to a scheme.
In this section, we wanted to turn specifically to the language of pensions to test
whether the words and phrases used by and about the industry were proving a turnoff. Using a part-humorous, part-serious set of questions, we wanted to find out if
the lexicon of pensions was as inaccessible – literally – as a foreign language. In fact,
pensions came out worse.
“Younger generations face a tougher economic climate than their parents, which is
why it has never been more important that they are as engaged with their finances
as possible. Ignorance will act as a barrier to an issue with which young people in this
country desperately need to get to grips.”
Katie Morley, Pensions Week
July 2012
11
Chapter 3
UK pensions – are they Greek to young adults? cont’d
Foreign language vs pensions jargon
We compared levels of understanding of simple, pre-GCSE French, Spanish and
German phrases with the everyday phraseology of pensions. If this had been a race in
the forthcoming Olympics, the gold, silver and bronze medals would have gone to the
European languages with the pensions phrases coming in the bottom three places.
A respectable third (33%) of those asked said they knew exactly what the French
question ‘Quel âge as-tu?’ (how old are you?) meant. Second best understood in our
list came the German question ‘Wie heißt du?’ (what is your name?) – with a fifth (20%)
saying they knew exactly what it meant. In third place, 17% of our survey group knew
exactly what a Spaniard would be asking when using the phrase ‘¿Cómo estás?’ (how
are you?).
We then put some pensions expressions to our twentysomethings. Just over one
in 10 (11%) said they understood the exact meaning of ‘annuity’ and the same
percentage knew what was meant by the phrase ‘final salary scheme’. Just 7% said they
understood the phrase ‘auto-enrolment’.
“We need a dramatic rethink on pensions.
Whilst they come across as inaccessible,
confusing and not a worthy use for the
already constrained funds of young people,
they will fail to appeal. Plenty of research
indicates young people are happy to save
if they fully understand the advantages –
they just haven’t been sold on pensions.
To borrow a quote from the classic film
‘Cool Hand Luke’, what we have here is a
failure to communicate.”
People in their 20s who understand what the terms below mean
Auto-enrolment
Final salary scheme
7
11
Quel âge as-tu?
33
Annuity
Iona Bain, young money blogger
%
11
17
¿Cómo estás?
20
Wie heißt du?
12
July 2012
Chapter 3
UK pensions – are they Greek to young adults? cont’d
“The terminology is not actually that complex once you are familiar with it – mobile
phone and computer jargon can seem just as obtuse when you don’t know what it
means – so tinkering with financial vocabulary probably wouldn’t help matters. What
we need is personal finance education and I think this should be brought into Maths
teaching from Key Stage 2 at Primary school. Failure to do so will result in them
sleepwalking into poverty in old age.”
Katie Morley, Pensions Week
“With automatic enrolment just around the corner, now is the time for the industry
to pull out all the stops to ensure that a whole generation of new savers are not
disenfranchised from planning for retirement. Failure to do so could jeopardise the
well-being of an entire generation.”
Did you know?
The number of UK women in their
20s signing up for a workplace
pension has fallen for four years
in a row, marking the most rapid
decline of any age group.
Source: ONS
Gareth Shaw, Which? Money
July 2012
13
Chapter 4
Spending into the future
As young people gain financial independence and take on new responsibilities, their
thoughts inevitably turn to how they will fund ‘life-building’ items like a wedding, a
healthcare policy or a house.
We were keen to discover what today’s twentysomethings believe to be attainable and
what they view as being future considerations. Which life-stage products and services
are going to come first and what salaries will each require so they can be adequately
funded?
What’s the magic number?
According to the Office of National Statistics the average annual income for fulltime employees in the UK is £26,100. With this in mind, we asked people in their 20s
to pinpoint the minimum salary they felt they would need before investing money in
eight key financial areas. From their answers we were able to plot a timeline for their
financial aspirations showing which product or service they would spend on first and
which they would invest in later. Only three of our products and services fell within
the £26,100 average earnings bracket. Rightly or wrongly, this means that today’s
twentysomethings believe the majority of our items will never be obtainable unless
they earn more than the average UK salary.
28% believe they need a £50k +
salary to invest in the stock market
The basics
The three items our survey group felt would at some stage be affordable to anyone
eventually earning at least the national average salary could be thought of as ‘the
basics’. Whether it is for driving to a first job or flying the nest to a new home, it is,
perhaps, no surprise that the first concern for young people is purchasing a car, and
the results show that £23,290 is the salary deemed necessary for this to happen.
When asked about buying their own
home, more than one in 10 believe
they need an annual salary of £60k+
As people get older, it seems that footing the bill of a wedding (or perhaps just
contributing) is next on the agenda. With the average UK wedding costing £20,273
some savvy saving is clearly required and our survey group said £25,769 was the salary
they would need to earn before putting money towards getting hitched. The third of
our ‘basics’ is investing towards a pension. Once a salary of £25,769 is hit, people start
to think about their financial future and the planning required for retirement.
14
July 2012
Chapter 4
Spending into the future / cont’d
Shoring up
Once our twentysomethings feel they’ve earned enough for a car, wedding and pension,
their thoughts will apparently turn to the services that could be said to ‘shore up’
their futures. According to the survey group, they will start life insurance payments
once their salaries hit £29,360. At £32,460, they will consider paying for professional
financial advice or planning. And at £32,474, they will be prepared to start putting
money aside for personal healthcare.
Splashing out
Tellingly, it is not until they will earn £33,729 that our twentysomethings say they will be
prepared to put money aside to buy a home. The fact that this milestone is now seen
as more unobtainable than pensions, life insurance, private healthcare and financial
advice is perhaps testament to the historically high house prices we are seeing.
Whereas homes were often three, four or five times a buyer’s salary in the 1980s, we
are now in an era where deposits can amount to these multiples.
“It’s surprising to see that twentysomethings are considering life insurance at such
a young age, even before they consider buying a home, and highlights a lack of
understanding about how to prioritise protection needs. Depending on the terms of
their employment, income protection would be a far more important product to own
than life insurance – you’re unlikely to have dependents to leave a payout for, but
almost certainly have rent and bills that need paying.”
Gareth Shaw, Which? Money
Less surprisingly, it could be argued, stocks and shares come last in our list – at
£34,942. But does this reflect reality? Are stocks and shares really less affordable
or important than all of the other items? Does it not depend, rather, on which stocks
or shares and how much one spends? This points to a perception problem that the
investment industry must tackle.
Car
Wedding
Pension
Life insurance
Financial advice
Healthcare
Home
Stock market
£23,290
£25,266
£25,769
£29,360
£32,460
£32,474
£33,729
£34,942
July 2012
15
Chapter 4
Spending into the future / cont’d
“The results of this survey could cause
Did you know?
some sleepless nights in the financial
industry – it shows many young adults
Research suggests young people trust financial advisers less than previous
believe they need a steady wage well
generations of young people and are turned off by financial advice.
above the national average to afford
property, financial advice, life insurance
Source: ‘Resuscitating Retirement Saving’, The International Longevity Centre
and investments. We could be looking at
a diminishing customer base for many
providers unless they do more to engender trust, change perceptions of how much
their services cost and prove what their long-term benefits are.”
Iona Bain, young money blogger
“Stocks and shares are predictably a low priority and perhaps rightly so – why put
your cash at capital risk in such turbulent times. However, with the high inflation of
the past couple of years, many will have lost out in the savings market through rising
prices, a factor few will understand or
even take on board. It’s something that
they’ll be all too familiar with when it
Methodology
comes to retirement and surviving on a
To work out these results, we asked people to pick the minimum salary band they
fixed income.”
felt they would need to invest in the eight financial stages listed. There were nine
Gareth Shaw, Which? Money
bands to choose from, fixed as: None, £10k, £20k, £30k, £40k, £50k, £60k, £70k
and £80k.
In order to calculate the average salary needed per financial stage, we tallied
each set of answers and divided each set by nine, resulting in eight magic
numbers.
Example:
33% of respondents said they would require a £20k salary before they would
consider purchasing a car, but 16.4% said they would need £30k. When the tallies
for all 9 salary options are taken into account, the average equals £23,290.
16
July 2012
Chapter 5
Banking on their reputation
Without access to banking services, most of us would struggle to go about our day-today lives. We use them to pay for shopping at the check-out, to obtain cash on a night
out, to make monthly gas, electricity and water bill payments, to buy homes and as a
home for our wages. In fact, the services they offer are ubiquitous. You might argue,
then, that customer satisfaction is of fundamental importance.
We wanted to understand whether twentysomethings were pleased with the service
they were being provided. So, we probed our survey group about how likely they were
to do that important word-of-mouth marketing that can supercharge the customer
acquisition programme at any financial services business.
In fact, less than a fifth (17%) of people in their 20s said they had recommended their
bank in the last 12 months.
“However you like to bank, poor customer service remains a constant irritation. Even
though they are among the most engaged consumers in society, young people are
reluctant to recommend their bank to their friends. Institutions must constantly work
on improving their reputation and products if this status quo is to change.”
Iona Bain, young money blogger
Our research suggests more than four out of every five twentysomethings are not
sufficiently satisfied with their banks to advocate it – we wanted to find out why. For
some, access was inconvenient or difficult. Others wanted communications to improve
– both traditional and online.
Access
While few would disagree that we are heading towards an era of online banking, our
survey suggests there is still a significant desire to be able to visit a high street branch.
Almost a quarter (23%) of people in their 20s had visited their bank in the last year
only to find it closed.
Others were left frustrated with complicated security when attempting to access
their accounts. Just over one in 10 (11%) of our survey group said they had failed in
an attempt by their banks to verify their identity, either on the phone, online or in a
branch.
July 2012
17
Chapter 5
Banking on their reputation / cont’d
Traditional communications
Banks have sought to move much of their customer interaction over the last one or
two decades onto telephones – making day-to-day banking easier for all, it could be
argued. However, this has often added, rather than removed, the friction from bank/
customer relations, according to our research.
Some one in 10 (10%) of our twentysomethings admitted to hanging up prematurely
during a phone call to their bank due to being “frustrated or angry”. Those in their early
20s (20-24) were more likely to have done this – 13% compared to 7% of 25-29 year olds.
Social media
With social media an ever-increasing presence in young adults’ lives, many of us are
turning to the internet to air our opinions. Yet, our study suggests some banks are
ignoring social media updates posted by the public.
While 7% of young people in their 20s say
they have complained about their bank’s
services via social media, less than half
as many – 3% of our survey group –
reported having had a problem solved by
contacting their bank via social media.
One would suspect that most rightthinking bank managers would like these
figures to be closer.
“Young people are highly savvy when
it comes to the internet and the use of
social media is now second nature to
them. The financial industry has tried to
keep up with the times – internet banking
is an incredibly useful development for
busy young professionals, and certain
institutions are winning plaudits for their
Twitter engagement.”
Which of the following have you done or
has happened to you in the last 12 months?
Had a problem solved by contacting your bank
via social media — e.g. Facebook, Twitter
Complained about your bank’s services
via social media — e.g. Facebook, Twitter
7
Failed an attempt by your
bank to verify your identity —
either on the phone,
online or in a branch
10
17
%
10
Hung up prematurely
during a call to your
bank due to being
frustrated or angry
Recommended your bank
3
22
Gone to your bank only
to find it closed
Iona Bain,young money blogger
18
July 2012
Banking on their reputation / cont’d
Would you recommend your bank?
“I did have an account when I was a student for a while, however my bank was very
aggressive when chasing overdraft repayments even though it was a student account.
I would probably go out of my way to recommend people to steer clear from them –
and what’s more, the adverts on TV get under my skin!”
Daniel Addicott, Taunton, Somerset
“I haven’t ever recommended my bank but I do like them most of the time. Although,
I have to admit, it’s mainly because when they have messed up in the past they have
given me money for it. I also like that they have a nice secure online system.”
Katie Moss, Prestatyn, Wales
“I opened an online savings account with one bank and had the worse experience ever.
When I couldn’t transfer my money online due to their complicated system, I called
them up only to be told they couldn’t help me as I failed my own security checks! In the
actual branch, they were also rude and slow. I have now closed the account and would
definitely not recommend them to anyone else.”
Jack Jewitt, London
July 2012
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Conclusion
We hope you found reading our report as fascinating as we found researching and
compiling it - there were certainly some startling results.
So what do we now know about the attitudes of young people to their finances?
Firstly, we have seen that some will go to great lengths to make ends meet. One in five
twentysomethings, for example, claim to know someone of their age who has gone
without food to save money. More worrying, one in 10 know someone who has been
involved in drug dealing and nearly one in 10 know someone in their age group who has
been involved in the sex industry to cover monthly expenses.
We also know the future is uncertain for large swathes of young adults. Many find
pensions – literally – more difficult to understand than foreign languages. Nearly half
of our group speculated that they would never have enough money to buy a home and
more than a third said they didn’t understand what buying a home involves.
Yet, our findings were not all doom and gloom. We got into the heads of our
twentysomethings and uncovered some intriguing insights into the salaries they
believe they will need to earn before they invest any of the eight key life stages we
presented to them – car, wedding, pension, home, stock market, life insurance, financial
advice and private healthcare. That figure is an arguably obtainable £34,942.50.
Finally, we turned the spotlight on the banking sector and asked our study group
whether they would recommend the services of their own bank. Only one in five said
they had done so.
So what next? Well it’s now up to the financial services industry to respond; to use the
insights in this report and help shape better futures for our young adults. They are the
next generation of net givers to society and it is surely imperative we teach them, work
with them and support them to get their own finances in order.
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July 2012
Biographies
Gareth Shaw is 26 years old and Deputy Money Editor at Which?. He’s worked at
the consumer champion for the past two years, and before that held a number of
positions, latterly Supplements Editor, at Money Management, and Financial Times
magazine. His pet hates in financial services are bad customer service and the buried
charges and lack of transparency in the investment and pensions industry.
Iona Bain is a 24-year-old Scottish blogger who writes about personal finance for
children and young people. She established Iona’s Young Money Blog in 2011, the first
of its kind in the UK, after taking an intense interest in the financial issues affecting
the younger generation, particularly since the recession took hold. She recently
contributed to a roundtable at the House of Lords on financial advice, writes regularly
on young money issues for investment houses and high street banks alike, and has
contributed to the Glasgow Herald, Daily Telegraph, Moneysupermarket.com and
publications at the Financial Times.
Katie Morley specialises in writing about DB (including public sector), corporate
governance and wider employee benefits with a particular interest in young people’s
pensions. She has appeared on BBC radio as a pensions expert and was runner up in
the Headline Money Rising Star of the Year Award (B2B) 2012.
Methodology
2,012 UK adults were surveyed by ICM between 23-25 March 2012. Contents of this
report are based on a nationally representative sample of 353 young people in the
UK aged 20-29.
Further information
For further information on the report or for comment, please contact:
Michael Taggart on 020 3326 9913 / 07780 008 939 / [email protected]
Jenny Crossland on 020 3326 9911 / 07766 567 297 / [email protected]
July 2012
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July 2012