Money maturity:

5 Tips for building strong financial foundations

75% of 16-18 year olds say they want to learn more about managing their money*. We're here to help you be confident with your cash.

Read our top 5 tips on how to help young adults build strong financial foundations for the future.

*Research conducted by OpenMoney (April, 2020) with 300, 16 - 18 year olds.

1. Eat, sleep, save, repeat

55% of 16-18 year olds say they want to carry on saving for something in the future, whether that's a house, car or holiday.

There are several ways people save and depending on the lifestyle they want to live, there's a saving method for everyone. Read our top tips for savings below.

Top tips for saving:

• Saving comes first. Put money away when you get it, don't save what's left over.

• Pennies make pounds. Round up your change to give your savings a boost.

• Try not to impulse buy. If you're not sure whether you should spend money on something, don't buy it in the moment and think about it for a week. 

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2. Uncover your Child Trust Fund

Around 6 million Child Trust Fund (CTF) accounts exist and over 1 million of those accounts haven't been claimed. This could mean that you have money sat waiting for you when you turn 18!

If you're not sure what a CTF is, read our quick guide below and find out how to uncover a lost CTF.

What is a Child Trust Fund?

• A government funded scheme that began in 2002 to encourage parents to save for their child's future.

• Every child born between 1st September 2002 and 2nd of January 2011 was eligible for between £250 - £500.

• When a child turns 18, they get access to the cash.

• You can find your lost CTF with the help of your parents through the Gov.uk website.

3. Grow your savings with interest

Earning interest on your savings is a great way to make more of the money you have. Interest rates work on an annual basis, so if you were earning 1% interest on your savings account with £500 in it, you'd earn an extra £5 in a year thanks to interest. You can then earn interest on your £505; this is called compound interest.

Read the different ways you can take your savings further below.

What to do with your savings:

• Open a flexible savings account or cash Individual Savings Account (ISA). Interest is guaranteed and often paid monthly.

• Open a fixed rate cash ISA. They often offer higher interest rates but you need to keep your money locked away until a certain date.

• Invest your money in a Stocks & Shares ISA. Investing can speed up your savings with higher interest rates, but it does mean your money is at risk and you could get back less than you invested.

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4. Be careful with debt

Once you turn 18 you're old enough to apply for credit, which is a form of debt. Poor management of your debt can lead to further problems in the future, especially if you don't keep up with payments - also known as defaulting.

Debt doesn't just mean credit cards too, there's been a recent rise in Buy Now, Pay Later schemes that are a lot more accessible to young adults through retailers like fashion websites. Read our top tips on how to make sure you're making the right decisions with debt.

Top tips for staying out of debt:

• Live within your means, if possible. Only spend what you earn and avoid using credit unless necessary.

• If you do use credit, make sure you can afford the repayments. If you can repay it fully by the next month, even better!

• Every time you apply for credit, this is noted on your credit record can negatively impact your credit score.

• Bad management of debt can lead to a bad credit score. A bad credit score makes it more difficult to get things like a mortgage in the future.

5. Get advice, get ahead

Sometimes we think it's taboo to talk about money, but that shouldn't be the case. If you start to talk about your money with others, you might learn some valuable lessons.

There are several places you can get advice about your money. Read our list below.

Where to get money advice:

• Your family and friends are always a good start!

• You can get financial advice from an adviser like OpenMoney.

• Read our blog for tips on money management, investing and more!

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