However, many of them refuse to tackle the problem head-on by reviewing their finances or planning for the future:
One in three people under 25 say managing money is their biggest cause of stress, over and above relationships and jobs.
Being in the red is a prime concern, with over a quarter of people under 25 worried about being overdrawn. This issue seems to get less and less important as people get older, with only 10% of over 55 year olds worried about overdrafts. The same is true for paying bills with more than 20% of the younger age group being worried about payments compared to only 10% of people over 55.
The main concern for the over 55s is having an adequate pension. Around 40% of this age group get stressed about providing for their retirement, versus only 4% of people under the age of 25.
Interestingly, the Nationwide survey shows that one of the areas that does not currently generate a huge amount of concern for young people is mortgages. Fewer than 1% of people aged 16-24 cite this as their main cause of stress. This figure does not rise much with age, as only 6% of 25-44 year olds report that mortgages stress them out the most. This may be due to recent low interest rates in the market.
Avoidance could be a key factor in causing stress about money matters. One in five people under the age of 25 avoid switching their current or savings accounts to another provider to take advantage of better deals; a further 20% avoid reviewing their finances and 18% delay arranging a pension.
Stuart Bernau, Nationwide’s executive director, believes that a lack of knowledge could prevent young people from sorting out their finances. “To some people these figures will not be surprising and maybe it is a reflection of the lack of financial education in our schools. But the truth is that not enough young people are confident about managing their finances and this can lead to poor product selection and the failure to plan for the future.”
The figures suggest that some of Britain’s youth have an ‘ostrich’ approach to managing their finances, by effectively burying their heads in the sand. However, Stuart Bernau suggests some simple tips that can be used to avoid stress.
He says: “Combining your debt into one monthly payment and devising a monthly budget are good ways of managing your outgoings. Our research shows that only 6% of people under 25 consolidate their debt to avoid worrying about money. Even fewer people plan their finances with an expert, which is a sensible option if you are unfamiliar with financial products.”
Stuart Bernau adds, “Set up direct debits to pay monthly bills, then you know that they are taken care of. It can even save you money because some companies charge a penalty of two or three pounds a month for not paying by direct debit. Also, think about setting up an overdraft as a precautionary measure – even if you don’t intend to use it. For example, if you were to go overdrawn by £500 one month without having an agreed overdraft facility, it could cost you as much as £38_ in fees and charges. However, with an agreed overdraft from Nationwide it would only cost you £2.70_.”
Other highlights from the Nationwide research show that:
