What experience do young people have with practical money skills?

Practical money skills are essential for young people to learn how to use credit and debit cards effectively, to start a savings habit and to think about investing and saving into a pension.

Yet over a quarter of 16–25-year-olds do not even have a debit card and are therefore not learning how to manage their own finances. That said over three quarters reported a regular saving habit and a third topped up savings accounts regularly.

While perhaps unsurprisingly those between 21 and 25 were more likely to have wider experience of money matters and more likely to have financial products such as a credit card or a savings account, ensuring young people understand financial concepts and can manage their money as they start to earn an income is important. Not only for individuals themselves but because financial confidence can also contribute towards a focussed and productive workforce.

Young people understand the need to save and do so when they can

76% have some sort of regular savings habit and a third said they top up a savings account regularly (e.g. every week/month) (34%). Over a quarter sometimes put money into savings when they have extra money or a specific goal to save for (27%) and 15% save on an on-going basis using a ‘round up’ feature.

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Experience with card use is often limited to having a debit card

Only a third of 16–25-year-olds currently have a credit card (32%)

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Having goals and using automation would help boost savings

Young people said they would save more by ‘having more disposable income’ (56%), ‘tying savings to life goals’ (32%), ‘getting cash back for saving’ (31%) and ‘making it easier to set up savings accounts’ (22%). One in five (21%) also felt that using technology and automation to automatically transfer a percentage of their salary into savings would also be useful.

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Which, if any, of the following, would encourage you to save more?

Having more disposable income

Tying savings to life goals

Getting cashback for saving

Making it easy to set up savings accounts

Using technology and automation to automatically transfer a percentage of your salary into savings after pay day if I was working

Receiving gamified rewards for saving such as badges, levels or prize draws for consistent saving

Receiving notifications when your spending is high or savings dip

Hearing from peers about how they have saved

If I was working having access to employer saving schemes e.g. opt-in payroll savings

Having a one-to-one coach for budgeting and saving

Don’t know

Not applicable – I do not want to save more

Other

“It’s becoming harder and harder to save due to the economics in this country, it’s constantly changing and the amount of accessible information on offer which doesn’t require assumed knowledge is very low, especially those in lower income areas.”

Participant in AAT commissioned YouGov online survey with 16–25-year olds in the UK

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“Having disposable income available to manage, too many young people only have enough money to get by on and don't have enough to save or invest, so think it's not important and never learn.”

Participant in AAT commissioned YouGov online survey with 16–25-year olds in the UK

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Almost half of young people are not saving for later life

The concept of savings and retirements seems a long way off when you are 16 and may not be earning much of an income, if at all. As such it is not a surprise to see that over 60% of 16-20-year-olds are not currently saving for retirement. However, that reduces to just a quarter for 21–25-year-olds, showing that the importance of saving for the future grows with age and likely work experience. However, some young people failed to prioritise this even for the future, with one in eight not currently planning to save for their retirement at all.