Yesterday, we looked at what was preventing Generation A from reaching their saving aspirations, according to MRM’s recent report “Generation A: from Austerity to Aspiration”. In this blog, we’ll look at the consequences not being able to save is having on this age group and what can be done.
Firstly, let’s look at what the survey had to say about financial priorities and goals. Top of the agenda for a third of this age group is to get onto the property ladder, with a third (32%) saying that this is their top savings goal. However, almost half (42%) say that they simply do not earn enough to save, with more than a fifth (21%) saying that their outgoings are just too high to allow them to put any aside.
The risk is that Generation A becomes disengaged from financial services, at the very age they should be starting to engage. What can be done to stop this from happening? The report has some insight into what young people think would get them saving. First of all, the concept of micro-saving seems popular: almost one in five (18%) said that a save-as-you-pay option, which would allow them to put money away every time they spent money on a debit card, would help them to save in the current climate. There are several of these now available on the market. The same number said that the Government matching their savings contributions up to a certain amount would encourage them to build a savings pot.
Could the industry and the Government do more to help them reach their goals? The report suggests they could. Many of those surveyed felt neither banks nor the Government was doing enough to help them meet their financial aspirations. But, with respect to the banks and the Government, the fact remains that without sufficient disposable income, it is difficult for young people to save.
As the economy recovers, our expectation is that salaries and interest rates will eventually follow suit. The best Generation A may be able to hope for at the moment is not to spend too far beyond their means, but the promising news is that they do seem to have learned some hard lessons from their parents’ generation, specifically around the importance of having a financial ‘buffer’ in case things go wrong. Our hope is that it will not be too long before they are able to put these lessons into practice, with an effective and regular savings strategy.
MRM will be hosting a panel debate on its recent Young Money report with the Chartered Institute of Securities and Investments on Wednesday, 6 April from 6:15-7:45pm. For more information, or to come along, please email firstname.lastname@example.org