A recent survey into their money habits found that UK millennials – those aged 18-35 – dream big; however, they generally currently have short-term, or no savings strategies in place despite harbouring a desire for greater financial knowledge.
Ten million – almost two in three – UK millennials say they have ‘traditional’ life goals, yet 7.8m have no savings or investments in place to help them achieve their ambitions.
The research by F&C Investment Trust and BMO Global Asset Management says that UK millennials are keen to follow in their parents’ footsteps; two thirds of 18-35 year olds hope to achieve their ambitions in the next 10 years.
buying a property, getting married and having a family as their top ambitions
The Millennial Money Survey interviewed over 4,000 UK adults aged between 18 and 35, extrapolating its findings to estimate that 10m (64%) had buying a property, getting married and having a family as their top ambitions.
However, the survey warned that 7.8m people risk missing out on a brighter future because they don’t hold any long-term savings or investment products; as many as half may never realise their aspirations unless they make pivotal life changes to their money habits.
Debunking millennial money myths
Eschewing the lazy stereotype of a generation of avocado-chomping experience junkies, the study debunks the myth that millennials do not have good money habits.
Almost seven out of ten plan to save more money in the current year than they did the last, with 35% doing so by virtue of making changes to their every day habits – eating out less, ditching takeaway coffee or spending less on socialising.
the lazy stereotype of a generation of avocado-chomping experience junkies
There are now numerous apps to allow young people to track and categorise their spending and quickly see the benefits of their evolving lifestyle choices; flushed with success, 42% of those surveyed said they wanted to channel the loot they have ‘saved’ to see the world, a surprisingly smaller 38% wanted to attempt that all important first step on the property ladder with 26% plumping for a new set of wheels.
To quash any accusations of profligacy, the majority claim to exercise good money habits, with six out of ten saying they would rather miss out on special occasions than borrow money to attend; the majority agree there is room to improve millennials’ financial understanding.
Often identified as generation debt, having gorged on easy credit and been lumbered with wads of student loans, many millennials prefer to avoid ‘going into the red’; 60% do not have an overdraft and 40% do not have a credit card.
Barriers to saving and investing
However strong their desire, 61% of millennials say that paying essential bills prevents them from saving money regularly; 41% say that their earnings are too low for them to do so and 39% say they are hamstrung by debt – far more than the 17% that cite their unwise spending on non-essential items such as take away food or drinks as a reason.
These factors are every bit as relevant when it comes to investing, but other impediments also include the 32% that cannot stomach the risk of losing their money and the 30% that do not feel they have sufficient knowledge or understanding about the investment options available to them.
Encouragingly, the survey found that many younger adults are motivated to improve their financial knowledge; 21% would like education about saving, 12% about managing debt and banking and 9% on the machinations of buying or selling a property.
However, the topic at top of the heap when it came to requiring more help or education was investing, which was quoted by a quarter of those surveyed; this may come as no surprise in light of the surveyor – however if greater education and engagement are the keys to achieving better financial outcomes, then everyone should be happy.
taking those first steps into investing, without taking excessive risk, can help them achieve their life goals
F&C Investment Trust says that it wants to help young adults understand the benefits of investing so they can make their money work harder and achieve their life goals. Commenting on the findings, Ross Duncton, Managing Director, Head of Marketing & Direct, at BMO Global Asset Management, who manage F&C Investment Trust, said:
‘UK millennials simply aspire to achieve what previous generations have enjoyed; and they do it with a fortitude that helps them survive in a post-credit-crunch world. While some have debt, it’s clear that the majority are far from a reckless generation.
‘In reality, most are sensible spenders who want to take more control over their money, despite a lack of formal financial education and income. Our research reiterates how small a leap many millennials need to take to help brighten their financial futures; many only need to shift their money mind set slightly to get their money working harder, and in turn help them achieve their ambitions.
‘We will be working with young people across the UK to illustrate why taking those first steps into investing, without taking excessive risk, can help them achieve their life goals.’