A weekly round up of all the developments in the world of young people and financial services. @SophieRobson2
OVERVIEW
Young people and finance have hit the headlines this week in the build up to the holiday season, because of the expenses attached to present buying and party going: apparently, many young people are struggling to afford even the basics of living. Renting and its associated expenses have almost dominated, as younger people continue to find themselves shut off the property ladder.
EMPLOYMENT AND EDUCATION
A poll of almost 400 NEETS (young people not in education, employment or training) by advice service Future You, found that many of them, not surprisingly are struggling to make ends meet. 63% say they cannot afford the dentist, 67% find it hard to pay for food, while 70% are having trouble paying their bills. Moreover, 82% found meeting the cost of travel difficult. And as for Christmas, 47% felt they wouldn't be able to pay for Christmas dinner, while 92% couldn't afford to buy gifts.
They were less than cheery about their future chances of employment as well: 60% didn't feel confident about their prospects of employment in 2013.
As for education, figures this week from the admissions body UCAS found that there has been a record fall in the number of people taking up places at UK universities this year. Nearly 54,000 fewer people than last year started courses this autumn than in 2011. Reasons for this are thought to be down to the rise in tuition fees to a maximum of £9,000 per year in England. However, there was some good news. Apparently, this 'correction' has led to more applicants being accepted at their first choice institution, and those from disadvantaged areas are increasingly winning places at the top universities.
SAVINGS AND INVESTMENTS
Housing woes continue this week for young people. Yet another survey, this time by the IPPR think-tank has shown a significant gap between young people's aspirations of owning a home, and the harsh reality they find themselves in. According to the survey, 51% of young people aged between 18 and 30 no longer believe that they will be able to afford to buy a house in the next 10 years, even though 88% wish they could. The survey also found that being shut out of the property market was affecting young people in other ways too, now that 3 million people aged between 20 and 34 are still living with their parents. 26% felt that their housing situation prevented them from being able to achieve important life goals, such as starting a family. 17% feel that their housing issues have a negative impact on their relationships. It seems that not only is the lack of affordable mortgages preventing young people from building financial assets, it is also preventing them from moving forward in life.
Another piece of research found that over the last five years, parents have provided over 228,000 first time buyers with more than £1.31bn in deposits, with parents giving or loaning, on average, £13,000 - up from £10,000 five years ago. And as if that wasn't bad enough, another survey has found that servicing an interest-only mortgage on an average property in the UK is £1,080 per year cheaper than renting. If only...
Savings accounts have also suffered a blow, as it was found that 351 savings accounts have disappeared from the market entirely this year - with 191 being withdrawn in November alone. This has been put down to the Funding for Lending scheme, which was introduced to help reduce the costs to banks and building societies of providing loans to people looking to get on the housing ladder, since the interest rate is no longer sustainable on some of these accounts. However, I wonder if, in the long run, this might make savings accounts more simple: after all, too much choice can often be a bad thing.
Meanwhile, the Huffington Post (US) is encouraging younger people to make riskier investments, contrary to what their parents might tell them. It seems they should take the amount of time they have until retirement into account, as well as the possible returns on riskier, higher yield investments.
FINANCIAL LITERACY
There was concrete proof this week that a lack of financial literacy can have serious implications both on personal finances and on a national scale. A survey for moneysavingexpert.com by the Centre for Economics and Business Research found that financial illiteracy costs the UK up to £3.4bn a year.
It claimed that better financial literacy could reduce the risks of unemployment by 10% and help reduce the unemployment subsidy by taxpayers by £600m, as well as helping reduce the levels of personal indebtedness in the UK and helping people to plan more effectively for their retirement. A separate study by Skills for Life found that one in four adults has the mathematical skills of a nine year old, struggling with even basic sums.
PENSIONS
About a million low paid workers - mainly women - are set to miss out on vital employer pension contributions after the government again raised the threshold for the minimum income at which autoenrolment applies, this time to £9,440 per year. Women - and young people - are most likely to be affected by this change, as they are more likely to take on low-paid or part-time jobs.
More encouragingly though, a Standard Life survey revealed that 54% of young British employees are keen to know more about autoenrolment. Those aged up to 35 are significantly more keen to learn about it than their older counterparts - just under a third of 35 and overs say they are interesting in finding out more - perhaps, the survey writers feel, because they felt they had already "missed the boat", while those aged under 30 felt they "had all the time in the world".
OVERVIEW
Young people and finance have hit the headlines this week in the build up to the holiday season, because of the expenses attached to present buying and party going: apparently, many young people are struggling to afford even the basics of living. Renting and its associated expenses have almost dominated, as younger people continue to find themselves shut off the property ladder.
EMPLOYMENT AND EDUCATION
A poll of almost 400 NEETS (young people not in education, employment or training) by advice service Future You, found that many of them, not surprisingly are struggling to make ends meet. 63% say they cannot afford the dentist, 67% find it hard to pay for food, while 70% are having trouble paying their bills. Moreover, 82% found meeting the cost of travel difficult. And as for Christmas, 47% felt they wouldn't be able to pay for Christmas dinner, while 92% couldn't afford to buy gifts.
They were less than cheery about their future chances of employment as well: 60% didn't feel confident about their prospects of employment in 2013.
As for education, figures this week from the admissions body UCAS found that there has been a record fall in the number of people taking up places at UK universities this year. Nearly 54,000 fewer people than last year started courses this autumn than in 2011. Reasons for this are thought to be down to the rise in tuition fees to a maximum of £9,000 per year in England. However, there was some good news. Apparently, this 'correction' has led to more applicants being accepted at their first choice institution, and those from disadvantaged areas are increasingly winning places at the top universities.
SAVINGS AND INVESTMENTS
Housing woes continue this week for young people. Yet another survey, this time by the IPPR think-tank has shown a significant gap between young people's aspirations of owning a home, and the harsh reality they find themselves in. According to the survey, 51% of young people aged between 18 and 30 no longer believe that they will be able to afford to buy a house in the next 10 years, even though 88% wish they could. The survey also found that being shut out of the property market was affecting young people in other ways too, now that 3 million people aged between 20 and 34 are still living with their parents. 26% felt that their housing situation prevented them from being able to achieve important life goals, such as starting a family. 17% feel that their housing issues have a negative impact on their relationships. It seems that not only is the lack of affordable mortgages preventing young people from building financial assets, it is also preventing them from moving forward in life.
Another piece of research found that over the last five years, parents have provided over 228,000 first time buyers with more than £1.31bn in deposits, with parents giving or loaning, on average, £13,000 - up from £10,000 five years ago. And as if that wasn't bad enough, another survey has found that servicing an interest-only mortgage on an average property in the UK is £1,080 per year cheaper than renting. If only...
Savings accounts have also suffered a blow, as it was found that 351 savings accounts have disappeared from the market entirely this year - with 191 being withdrawn in November alone. This has been put down to the Funding for Lending scheme, which was introduced to help reduce the costs to banks and building societies of providing loans to people looking to get on the housing ladder, since the interest rate is no longer sustainable on some of these accounts. However, I wonder if, in the long run, this might make savings accounts more simple: after all, too much choice can often be a bad thing.
Meanwhile, the Huffington Post (US) is encouraging younger people to make riskier investments, contrary to what their parents might tell them. It seems they should take the amount of time they have until retirement into account, as well as the possible returns on riskier, higher yield investments.
FINANCIAL LITERACY
There was concrete proof this week that a lack of financial literacy can have serious implications both on personal finances and on a national scale. A survey for moneysavingexpert.com by the Centre for Economics and Business Research found that financial illiteracy costs the UK up to £3.4bn a year.
It claimed that better financial literacy could reduce the risks of unemployment by 10% and help reduce the unemployment subsidy by taxpayers by £600m, as well as helping reduce the levels of personal indebtedness in the UK and helping people to plan more effectively for their retirement. A separate study by Skills for Life found that one in four adults has the mathematical skills of a nine year old, struggling with even basic sums.
PENSIONS
About a million low paid workers - mainly women - are set to miss out on vital employer pension contributions after the government again raised the threshold for the minimum income at which autoenrolment applies, this time to £9,440 per year. Women - and young people - are most likely to be affected by this change, as they are more likely to take on low-paid or part-time jobs.
More encouragingly though, a Standard Life survey revealed that 54% of young British employees are keen to know more about autoenrolment. Those aged up to 35 are significantly more keen to learn about it than their older counterparts - just under a third of 35 and overs say they are interesting in finding out more - perhaps, the survey writers feel, because they felt they had already "missed the boat", while those aged under 30 felt they "had all the time in the world".
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