Savings: Caution issued as many Britons do not have savings accounts | Personal Finance | Finance

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New analysis carried out by online finance coaching app Claro found over a third of those under are classified as being “perpetually poor”, despite earning £40,000 or more.

The study was conducted in December 2020, based on a survey of 1,934 young adults from Britain.

As part of the report, this demographic has been classified as HIPPYs or ‘High Income Perpetually Poor Young’.

Claro’s study determined that young people across the country have a predisposition for spending more than they earn, even when earning a high salary.

Some 42 percent of the under 30s  polled, who earn over £40,000 admitted to having no monthly budget to track their regular expenses against their income.

This is a sharp rise when compared to young people in general, with 29 percent of the wider age demographic admitting to the same.

On top of this, young high earners were found to severely struggle when it came to saving money or securing an emergency fund.

Around 20 percent of those surveyed said they set aside their money in a savings account and only 25 percent have a basic investment, such as an ISA.

READ MORE: State pension age: DWP & Thérèse Coffey pressured to ‘offer real support’ to WASPI women

 

“For others, they may feel that they can never earn enough. No matter how much their income increases, factors like lifestyle inflation seduce them onto a perpetual cycle of always needing more.”

“In our research, younger people were found to be lacking basic financial skills and awareness. Scores for those aged 34 and under were, on average, 16.5% lower than the national average.

“This age group is undoubtedly facing a more challenging financial environment than previous generations.

“Student debt, high rental costs and house prices, combined with wage increases which haven’t kept up with inflated living costs means fixed outgoings are taking a much larger proportion of a young person’s income than ever before.”

Claro’s research was carried out in support of its Mental Health Project report, in partnership with Mental Health UK and The Money Charity.

It found British people under 30 had the lowest financial literacy rates compared to any other age group.

In addressing these figures, Ms Lowman took aim at the lack of education in British schools regarding personal finance.

She said: “While this unique financial environment certainly plays a part, these results suggest a deeper underlying problem in a lack of education about finances and money management taking place in UK schools.

“It seems that an entire generation of young people lack the basic skills that are so important for building a secure and sustainable financial future, exposing themselves to the mental health implications shown in our data.”

Organisation, including Claro, are encouraging young people to take their finances seriously and come forward with any concerns they have.





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