How to Build Financial Resilience in Your 20s – Report Young People Face an ‘Uphill War’

Rising student loans and rising property prices are already a big concern for young people. According to a new report, throw out the epidemic and high cost of living, it’s no wonder they are interested in their financial prospects — and nearly half (47%) 18-30 year olds have low financial resilience

Ben Glover, Deputy Research Director Demos Releasing a report backed by the Yorkshire Building Society, he said young people are facing a “great war” amid the current cost of living crisis.

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Low economic resilience does not mean you are less prepared for sudden changes in circumstances or larger costs. It can cause a lot of anxiety and can affect a person’s overall well-being.

But there is hope. We asked money experts for their top advice on building financial resilience in your 20s …

Make a plan“It seems obvious, but the best thing to do to help young people become more financially resilient is to have a plan,” says retirement and savings expert Vince Smith-Hughes Pru (pruadviser.co.uk)

This does not mean that you will solve all your problems overnight, and your circumstances and priorities may change over time. But this is an important first step in empowering yourself with your controlling power. There are chances that baby steps towards your goals – but setting those goals is just beginning, and baby steps will also join.

Check your expensesWhere is your money currently going – are you on track? Or are you tapping that debit card until your bank texts that you’re in overdraft again?

“Small changes that can narrow your outlook to find where you can control expenses are a good place to start. Judge what really is and isn’t, and include it in your daily expenses,” he says. Tina Hughes Director of Savings at the Yorkshire Building Society. “Review monthly direct debits and subscription services and keep only what you can afford.”

Management Budget Budget, Budget!From there, you can plan how much remains after your entire needs and decide how you want to divide it among other living expenses and savings. Whether you’re using spreadsheet, diary and pen or apps like Monzo, Yolt and Money Dashboard, budgeting can transform your money habits and confidence.

Hughes suggests you consider how you can hold “good lockdown habits” here. “On lockdown, many of us found trips to hairdressers, evenings to gym trips and restaurants, and home cooks, workouts and cooking from scratch,” he says. “Maintaining lockdown practices can make a useful difference in your finances.”

But be realisticBudgeting wisely does not mean snatching all the happiness out of your life. Seeing friends, doing good things, and eating a decent meal are all important to well-being. Being too ambitious with your budget can quickly backfire. So be realistic – but be careful and creative and achieve a happy balance. Shopping habits that increase debt will not do you much good. For walks, coffees and casual meals or a movie trip with friends, the spirit is soothing and well worth it, especially if you look for offers and deals.

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Make your ‘Emergency Pot’ a top priority“Part of your plan is to set aside money on a regular basis – the rule of thumb is to build a three-month salary pot that will help with any short-term unexpected bumps in the road,” says Smith-Hughes.

Some call it the ‘Emergency Pot’ or the ‘Monsoon Treasure’ – so if you suddenly lose your job and need some time off, you know you have enough time to cover yourself for a few months. Fork out for unexpected expenses, such as breaks, or dental treatments. It will burden your mind and prevent you from borrowing suddenly.

Make a habit of savingWe know it can be frustrating to save when you have difficulty paying bills, and there is no ‘Bank of Mum and Dad’ to tap into. But this is really the key to your financial resilience – and like all practices, it considers stability. “The most important thing, especially early in your career, is to get into the habit of saving; even a small amount of extended periods of time helps keep the bump from turning into a hole,” says Smith-Hughes.

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It is never too early to think about your pension“For young people, the idea of ​​saving for later life seems impossible or will be the last thing on their minds,” admits Georgie Burks, head of marketing at Penn Fold. “[But] Even when people are only £ 1, it’s still important to start saving for a pension as soon as they can. This is because of the power of compound interest, which means that the pension grows by generating more money from each investment, on a continually expanding basis — your interest begins to earn you interest — if a person starts saving first, their investments must do so. “

Berks says you can always change or pause these payments when you need them. Retirement may seem misguided, but your future self will thank you in advance.

Think about your relationship with moneyEmma Maslin, Mum’s whisper, joins hands with Lloyd’s Bank on her latest ‘Making a Statement’ financial wellbeing campaign, to give you a deeper idea of ​​our relationship with money and how your family’s financial background can affect you. It helps us identify our individual blocks and goals and helps us be more flexible about where we are.

“There is no one-size-fits-all solution. Personal finance is personal, so there is no ‘right’ way to achieve good financial well-being, especially when our emotional relationship with money is unique and defined by personal experiences,” says Maslin. “Think of financial well-being as an ongoing journey rather than a destination, but make sure you take consistent steps in the direction you want to travel.

Tune in Your self-talk, “he adds.” We often have tough financial conversations with us – listen to this voice inside your head and learn to accept your present reality critically. “

Talk about it

Talk to others about money. We don’t do that very often – but that does mean we are only burdening our worries and missing useful conversations. “Financial planning can be stressful for many, but don’t fight your own,” says Nijel Borewell in local financial advice (localfinancialadvice.co.uk). “A financial advisor should be able to help you understand your financial matters and explain the way you meet your goals.”

Chat with friends too. “Use friends as a ‘commitment tool’ to build new and healthy economic behaviors. Share your financial goals, listen to what others are struggling with, and find solutions to each other with fresh eyes.

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