The years as a young adult can be some of the hardest times financially. People in their 20s can be at a stage in their lives where they’re just starting out in their careers, they’re on a low income and trying to save for the future. Throw in the cost of living crisis and there’s a lot of pressure for people in their 20s to stay on top of their finances.
As part of our review into the cost of living crisis, we interviewed 2,000 people of all ages, from 21 to 55+ years old, with incomes ranging from up to £18k to more than £100k. Our research aims to show that the rise in the cost of living is still a big concern for many people, regardless of their age or financial situation.
Whether you’re a parent to a young adult or know someone in their 20s who has financial concerns and wants to get better at managing their money, our tips for saving and managing money for young adults might be worth sharing with them.
Being in a comfortable financial place is always a challenge for young adults in their 20s. They might not be where they’d like to be in terms of salary, or might not have as much savings in the bank.
With the rise in the cost of living, there’s no wonder why so many people are concerned about how the UK’s economy is impacting their financial well-being. Our research told us that 78% of the people we interviewed, who are in their 20s, are concerned about the performance of the UK’s economy as it has a major impact on their financial situation. People between 20 and 30 are also more concerned about fuel and energy prices, the rise in inflation, the cost of everyday necessities, house prices, and the effect these hikes have on wages.
According to our research, 69% of people between 20 and 30-years-old said that the cost of living impacts their decision-making around getting a mortgage and owning a home. If you know someone who is worried about how they’re going to be able to get a mortgage, then hopefully our research and tips will help to reassure them that they’re not alone.
There are different options available to help get the most out of their savings and get a better return rate. Our research found that 64% of 20-30-year olds said that they plan to move their savings this year to get the best return from rising interest rates, and this is a smart move! It’s always worth shopping around to see how it’s possible to boost deposits. There are different types of Individual Savings Accounts (ISAs) available to help make savings go further and get a better return on investment.
A great way for young adults to start getting a better idea of their finances is to put a budget in place. Our research showed that only 50% of the 20-30-year-olds are confident about managing their finances. The first step is to look at income to see how much money is coming in and then look at the outgoings. The 80/20 budgeting rule is popular as the principle is to use 80% of your income on bills, general outgoings and everyday necessities and put 20% away into savings – this is a great tip for everyone!
If their plan includes becoming a homeowner, then it’s always a good idea to start working now to help reach their goal. A financial advisor can support with visualising and planning finances for the future to help prioritise budgeting and work towards getting a mortgage. They’ll help with making sure they’re investing in the right places and that their budget is sensible.
This article is correct at time of publishing and for general information purposes only. We recommend you speak to a professional financial adviser for advice. You can find a financial adviser and further personal finance information at unbiased.co.uk.