Youngsters have big ambitions

A generation of financially ambitious youngsters are heading into the world and they have grand plans for where they want to be in the coming years.

Research by Alliance & Leicester shows that around 24 per cent of today’s 16-21 year olds who currently work expect to be earning £40,000 within the next ten years.

That would mean they would be earning almost double the national average wage which currently sits at £23,244.

The ambition to earn more means that the majority of people in this age group (81 per cent) expect to have a mortgage and own a property by the time they reach 30.

A recent survey by National Savings & Investments labelled many British savers as fantasists but today’s 16-21-year-old working population has reason to feel confident.

Figures show that 26 per cent of people who chose to go straight into fulltime employment are now debt free and can begin thinking about saving up some money for their future plans.

“These days, young people have high financial and lifestyle aspirations and getting on the career ladder early can be the quickest way to achieve their goals for many,” said Helen Palmer from Alliance & Leicester.

“As a group they recognise the growing trends of graduate debt and, in contrast, the potential advantages of going straight into employment – especially climbing the first rung of the property ladder and earning substantial amounts of money.

“It is important for this group to maximize the potential of their hard earned cash and this isn’t about clever investment choices or making timely and strategic financial decisions – it’s about basic management of money in a current account,” she added.

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Financial landscape changing for youngsters

Today’s under-25-year-old’s are too saddled with debt to get married or leave their parents’ home but believe that they will be able to get a mortgage soon.

New research by enagage Mutual Assurance shows that this age group is confident of being able to afford a property much earlier than people did in past generations.

The study shows that under-25s are living with their parents three years longer than older generations did and they are also getting married four years later.

However, they anticipate being able to buy their first home one year earlier despite property prices rising.

The reason behind this seemingly skewed view of the future, says engage, is that today’s under-25s are more accustomed to living with debt than previous generations.

“With consumer debt at an all-time high, 125 per cent mortgages readily available and credit at our fingertips, today’s young generation has become more accustomed to living with debt,” said Karl Elliott, engage spokesman. “As a result, attitudes to financial milestones are changing.

“While it is encouraging to see that today’s under-25s are not put off by ever-increasing house prices, it is important that they are as prepared as possible when it comes to savings.

“By putting away a little and often over the long-term, both parents and off-spring can cope better with the financial milestones to come,” he added.

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Start saving early, warns Saga

Young people are being encouraged to start banking their pensions early or risk a tough time when they hit retirement.

Over-50s advisor Saga says that youngsters should be putting money aside as soon as possible by using tax-efficient savings tools and watch what they spend.

Spokesperson Steve Ashton said the sooner people begin saving their money for retirement, the less pressure they will have on them to put cash away in later in life.

He added that it would leave people less likely to get into financial difficulties, such as having to re-mortgage their home.

“Everybody ought to every year be trying to put as much money as possible into the basic tax-efficient savings vehicles, such as your annual ISA allowance,” he said.

“[It's] all very straightforward stuff, but if you are putting a few thousand pounds every year for a number of years into an ISA, then that over ten, twenty years can really start to ramp up and make a significant difference to your retirement income.”

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