It can be easy to assume that the older we get the better we get at managing our finances.
There may be some truth to this as research we conducted with YouGov earlier this year found that 44% of 25-34 year olds are more likely to have a short-term outlook on their finances, compared to 24% over 55.
In fact, 30% of over 55’s say that they plan a year or more in advance.
Confidence in managing money also seems to improve with age, with 92% over 55s agreeing they know what they’re doing, but only 68% of 18-24 year old’s.
Is it just a millennial issue?
It could be easy to say that the reason younger generations are ‘bad with money’ is because they spend too much on brunch, coffee and frivolous things as they follow trends – at least that’s what the media would have you believe.
In reality, there are many reasons why younger generations are finding it tough to stay on top of their money.
36% of 25-34 year old’s blame unexpected bills or one-off costs for their financial difficulties, and 24% say that their income didn’t meet the essential costs of living.
While we would like to imagine that our income will go up as we get older, and our household debt will reduce, this is not always the case.
Those aged 35 to 44 are more likely (56%) than any other age group to struggle to keep up with their household bills and credit commitments, compared to 39% of all ages.
Three quarters (76%) of 35-44 year olds also had outstanding debt, compared to an average of 56%, with the most common being mortgages (46%), credit cards (40%), authorised overdrafts (19%), student loans (16%) and unsecured personal loans (15%).
You could put this down to the extra responsibilities often associated with this age group, such as buying a house and managing a young family.
Our CEO, Anthony Morrow said, “those in the middle age group are more likely to be facing the financial pressures of creating their own home and starting a family, while still paying off outstanding student loans.
“While providing financial education in schools is an important objective, offering support and advice around good financial management and planning to adults seems just as crucial to improving the wealth of the nation as a whole.”
Let’s break the cycle
You’ve probably heard the saying ‘money makes the world go round,’ and although this isn’t true scientifically of course, money undoubtedly has a huge influence over our lives.
Money management and planning is a skill that everyone would find useful, no matter age, gender or income. And it shouldn’t be something we only think about when the going gets tough, or major life events take place.
There are financial cycles we fall into. These are cycles that need to be broken to improve the nation’s wealth.
There is help out there, but 25-34 year old’s are more likely to use money from savings to resolve financial difficulties, lean on family and friends (40%) or take out a loan (21%), than seek financial advice from a specialist (4%).
But why are UK adults less inclined to reach out to financial experts?
The answer may be within what the industry calls the ‘advice gap’. Many people across the UK fall into this advice gap, people who are unable to or unaware they can access help with their money.
In fact, 19.8 million (39% of our sample) want advice but are unable to pay for it and/or are unaware of or unable to access affordable services.
That’s why our co-founders Anthony and Duncan created OpenMoney. To make financial advice accessible and affordable to those who need it.
You can download our report on the advice gap to get the full picture.