The reason younger savers are on the rise

How generational savings habits are changing

Financial habits are constantly evolving. The way we bank, earn and live continues to change, shaped by technology, lifestyle and wider economic pressures. Fluctuations in base rates, inflation and cost of living are all having noticeable effects on how and why people save.   

So, why if we’re all in the same proverbial boat, are younger savers emerging as some of the most engaged and active of us when it comes to our finances? 

These figures highlight a noticeable shift in savings behaviour by generation, with younger adults putting away a larger proportion of their income than many older age groups. Of course, it’s worth noting this is the percentage of income and not total amount, so total amount for older generations is likely to be higher due to generally higher incomes.

And it’s not just putting cash aside for a rainy day, Pensions UK also found younger generations are emerging as among the most informed, engaged and proactive age groups when it comes to pensions and investments.

Why younger savers are bucking trends

Almost two thirds of Gen Z (those born between 1997 and 2012) say they turn to ‘finfluencers’ and online content as their main sources for financial research, including blogs and short-form videos covering everything from saving to investing. Millennials (1981–1996) are not far behind, with around 60% using social media for financial information.

What this suggests is younger generations are not only more exposed to financial information but are actively seeking it out. Growing their wealth, being confident and aware of finances and really, this can only be a positive.  Saving and investing are becoming more mainstream and less of a financial taboo which encourages more conversations around money management. 

Alongside this, digital banking and investment platforms have made it easier than ever to take action. From opening savings accounts to managing investments, much of this can now be done quickly and intuitively from a smartphone. 

Growing up during a period of economic uncertainty, including rising living costs, may also have increased financial awareness among younger adults, particularly as they’ve seen households adapt to these changing conditions. 

Why midlife remains the biggest savings challenge

Interestingly, it’s midlife savers, particularly those aged between 45 to 54, who appear to face the greatest challenges when it comes to saving (source: ThisisMoney). This could be a reflection of their life-stage: for example, many will be part of the ‘sandwich generation’, supporting both children and ageing parents, while also balancing increasing costs of living with potentially slower income growth. Some may be working fewer hours due to caring responsibilities resulting in less disposable income and less to save.

There’s also the impact of the ‘lifestyle creep’, where rising income is matched or exceeded by rising expenditure, giving them less money to put into savings as more of their disposable income is spent on luxuries deemed as necessities.

Combined with different financial priorities and potentially less engagement with newer sources of financial information, almost one in four (38%) reported saving £0 per month, the highest proportion of non-savers across all age groups.