Young people and their finances: a view from two employees

Research shows that COVID-19 had a strong impact on younger people aged 18-34 last year, with financial vulnerability rising by more than 40%. But according to young money expert, Iona Bain, more young people than ever are getting acquainted with their finances.

We caught up with two younger HL employees, Martha (22) and Harry (20) (names changed for confidentiality), to hear how they manage their finances, their day-to-day stressors and what they think of employer-sponsored financial education.

Tell us a bit about you and what you enjoy spending your money on

Martha – After paying my bills, I tend to spend any money I have left on meals out, getting my nails done, beauty and family days out.

Harry – Outside of work, a lot of my money goes on football games, going out in town and tickets for music gigs.

How do you feel about the way you manage your money?

Martha - I think I’m quite good at managing my money. Working at a financial services firm has really helped. When I first started here four years ago when I was 18, I had never heard of an ISA or things like premium bonds. Now I know about them, I save into both.

I always make sure to separate ‘enjoyment’ savings from savings I’ll need for the future.

Harry – There’s always room for improvement, but I think I cover the basics pretty well. My dad was a financial adviser and my mum’s an accountant, so I’ve been brought up with the mantra, ‘don’t spend beyond your means’. I live with that as my own thought process now and always make sure I’ve got the basics first, before I go out and spend my money.

I started at HL on a smaller salary than what I’m on now, and I still try to live on that amount of money. Anything above that amount that I earn, I save or invest.

To be honest, the pandemic helped me a lot. I was only spending a minimal amount, and I was able to pay off any debts that I had, so I’m not as worried about money as I used to be.

Do you think the way that you manage your money differs from your friends/other people your age?

Martha – Money comes up every so often with my friends, but mostly my friendship group is quite quiet about it. I’d say people are more likely to speak about it if they don’t have any money, rather than if they’ve got a lot. One of my friends asks questions about finances, purely because they know I’ve got a decent level of knowledge about it.

Harry – We all have very different ways of managing our money. I’ve got a core group of three mates – one works at a pub, they earn a fair bit, but don’t save and spend 85% of their money on going out. My other two mates are at uni. One’s pretty good with money, but the other one has never worked, lives in their overdraft and borrows money a lot.

Do your finances ever cause you stress?

Martha – I don’t get particularly stressed out by my personal finances, but I know some of my friends do. There is a lot of pressure from social media to buy the latest clothes or technology, and a lot of people I know use ‘buy now, pay later’ payment options.

Everyone puts the best parts of their life on social media. You always think someone’s better off than you because they’re showing off the new flash car, but what you don’t see is that they’ve bought that car on finance.

I think comparison is the biggest stressor on finances for young people.

Harry – Not so much now. But they used to. When I first started working, I didn’t have as much money as I do now, and it was definitely on my mind a lot of the time. But I was lucky as I still lived at home, so didn’t have to worry about paying rent or other bills.

Social media wise, I’m a sucker for targeted ads, but I don’t often see something and buy it right then and there. A few of my friends believe everything they see.

Do you think employers have a part to play in helping their employees manage their money?

Martha - I really like that HL holds webinars on helping employees manage their finances.

I think it’s up to the employer to choose a financial education provider that really shows the benefits of managing your finances properly and starting to invest early. I think the key is to really tailor the message to younger employees if you want them to listen. It’s about affinity, getting younger employees to buy into what you’re telling them. For example, retirement is real money, even if it doesn’t feel like it when you’re saving.

Harry – Definitely. I’ve done a pension planning webinar, although I’m still not sure if I’m doing enough. And I’ve attended a few investing webinars just to make sure I understand enough to make my own investment decisions.

What do you think would help younger people engage with their finances?

Martha – I think it’s about using simple language and not overcomplicating it. Finance professionals use a lot of jargon that’s not always needed. It doesn’t have to be confusing because it can be really easy. You just need to know what to look for.

Harry – If I didn’t work for a financial services company, I wouldn’t have a clue. My mum is in the education sector, and we’ve talked about how financial education is never talked about at school.

When people leave school and are expected to suddenly understand how to manage their finances, that’s a really big change. And if someone finds the day-to-day management of their finances confusing, they won’t go near them. It should be pushed more in schools so that young people are given the right knowledge early.

This article isn’t personal advice. If you’re unsure what to do with your own finances, seek advice. Investments fall and rise in value so investors can lose money.