Cost of living crisis hits young adults the hardest, says report

Almost half (47 percent) of 18 to 30 year olds have poor financial resilience, according to research.

People with poor financial resilience may be burdened by their debts or have poor solvency in the event of a financial shock.

The results among the younger generations are comparable to 38 percent of those aged 31 to 50 and 17 percent of those over 51 who have poor financial resilience.

The study was published by the bipartisan think tank Demos, which claimed that young people are facing “the greatest tough battle” amid a cost of living crisis.

Those aged 18 to 30 were more likely to be savers than any other age group, with a minority of 16 percent not saving at all.

But younger people have also tended to spend more when they spend on essentials, the Yorkshire Building Society-sponsored report found.

On average, the younger generation spent more than twice as much as the over 51-year-olds on basic necessities such as rent or mortgage payments and other bills.

Young people were significantly more likely to fall behind with domestic bills and credit card repayments in the past six months, at 31 percent, compared with 3 percent of those over 51.

Demos urges a commission to ensure the financial well-being of future generations, chaired by a committed minister.

Ben Glover, assistant director of research at Demos and lead author of Bouncing Back research, said, “Despite the criticism often seen young people who are regularly accused of spending too much money on coffee and avocados and not being financially prudent, is our new Research shows how very young people try to conserve their finances and save for the future – more than any other age group.

“But in the midst of a cost of living crisis, they are still faced with the greatest tough battle, with the highest spending on essentials, a lack of support and a system that doesn’t work for them.

“It is time for government, politics and financial institutions to work together urgently to improve the financial well-being and prospects of young people after the pandemic.”

The report also recommended expanding existing savings plans or examining a new tax-privileged savings plan specifically designed to help under-30s with emergency savings.

It is said that education providers should work with employers to help them provide more financial education and support to their employees, with a special focus on young workers.

Mike Regnier, General Manager of the Yorkshire Building Society said, “The research really shows the challenges that the increased cost of living is for 18-30 year olds.

“Even before the pandemic, many young adults were faced with a difficult financial situation and the effects of Covid-19 on the economy only exacerbated it.

“This is an issue that deserves urgent attention to ensure that the serious challenges young people face in terms of cost of living crises, over-indebtedness, adequate savings and extensive financial education are addressed in a meaningful and timely manner.”

Demos conducted two surveys in June 2021, one of 1,000 18-30 year olds and another nationally representative survey of 1,000 adults across the UK.

It then presented the results to experts from politics, business and youth civil society to help develop potential policy solutions to strengthen young people’s financial resilience.

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