Low wages and bills 'thwart 18-35s' savings ambitions'

Woman with cash Image copyright Thinkstock

The under-35s are not a spendthrift generation, but are struggling to save owing to daily financial pressures and low wages, a trade body has said.

Young adults aged 18 to 35 are often described as the Yolo (you only live once) generation.

But the Pensions and Lifetime Savings Association said that label was unfair, claiming that as many got satisfaction from saving as did from spending.

The cost of living and low salaries were the biggest barriers to saving.

Fewer thought that their lifestyle scuppered any attempts to save.

The association's research with a relatively small group of 18 to 35-year-olds suggested that the majority were not racking up debts, outside of student loans. About a third were saving for a rainy day and a third were saving for a one-off such as a car, holiday or television.

Joanne Segars, chief executive of the association, which represents pension providers, said: "The 18-35 year olds are no different to many people - they want to save for a secure future, but short-term financial pressures get in the way.

"It is not surprising that without help, this group prioritises short-term over long-term saving, given the current rock-bottom interest rates and low wage increases."

Count the Penneys

Image caption Alex (left) and Joe Penney are hoping to save

Brothers Alex and Joe Penney are at different stages of their financial journey - and they have different priorities as a result.

Joe, 19, is soon to leave for university in Edinburgh to study philosophy and economics and is expecting to start building up a student debt.

He is hoping to get a part-time job to help pay for some of the day-to-day costs of student life.

"It might take a while in terms of properly saving for the big things, but I will try to save a little bit of it," he said.

Alex, 23, is just about to start work in a graduate programme in a new city, having completed his studies - and has the debts to show for it. He has already mapped out a savings and investment strategy.

"I am hoping to start saving from my first pay cheque. The only thing stopping me is the deposit, rent and fees when I move," he said.

"Most people [my age] are scared of the stock market, but I'm interested in it all."

Joe said he expected to ask his brother for advice in the future.

"He has it pretty well sorted," he said.

One pensions provider said that rising rental costs were eating up more and more of young people's funds as they strived to own a property.

"The gap between wages and property prices continues to widen. Faced with these property pressures, it is understandable that the need to save for retirement can feel like a luxury few can afford," said Alistair McQueen, savings and retirement manager at Aviva.

"It is to the millennials' credit that more than half see saving for their retirement as a financial priority. It is also to their credit that more prioritise long-term saving than short-term spending."

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