Two in five are concerned about paying household bills

Two in five (41%) young adults are worried about their ability to pay household bills at a time when many costs are set to rise over the coming months, according to Comparethemarket’s latest Household Financial Confidence Tracker.

As the cost of living has risen over the past 12 months, 44% of 18 to 24-year-olds feel they are in a worse position financially compared to a year ago. Over a third (34%) have found it difficult to keep up with household expenses such as rent, energy, water, and credit card bills over the past six months.

Some key household bills are set to increase further in April. For example, broadband suppliers will introduce inflation-linked bill increases. Many local authorities will also increase council tax by 5% in April.

To meet these additional everyday costs, 41% of young adults are considering taking on additional debt, either through loans, Buy Now Pay Later schemes or credit cards. Over two-thirds (67%) say they feel stressed about managing their personal finances.

To try and counteract rising costs, many young adults are cutting back on non-essential expenses, such as eating out (53%), spending money on clothes (43%), going to entertainment events (40%) or going on holiday (37%). Overall, more than 90% of young adults have needed to cut back on at least one area of expenditure to cope with rising living costs. Concerningly, one in four (25%) have skipped meals and nearly one in ten (9%) have needed to use a food bank.

Two-fifths (40%) of young people have moved back in with friends or family over the past 12 months, with 23% saying the reason was driven by the financial difficulty of renting or buying somewhere of their own. Rising rental prices has been especially challenging over the last few months, with data from Rightmove’s latest Rental Price Tracker stating average rents have increased by 9.7% year-on-year, with Greater London increasing by 15.7%.

Hélène Barnes, Cost of Living Expert at Comparethemarket said “The aftereffects of the pandemic and ensuing cost-of-living crisis mean many young people are facing real financial struggles nationwide. Upcoming bill rises in April will only exacerbate this situation. Comparethemarket is dedicated to improving young people’s financial and social mobility by helping them make better financial decisions. The purpose of our partnership with MyBnk is to help more young people get better access to high-quality financial education, removing financial stress and equipping them with the skills and services they need to manage money in a cost-effective way. Over three years, the partnership aims to help over 70,000 young people directly.”

Leon Ward, CEO of MyBnk said “With costs continuing to rise, the severe impact of the current economic crisis on young adults remains deeply concerning. Our money links with so many aspects of our lives, including our relationships, career prospects and our mental health; making the repercussions wide-reaching. Our research with Comparethemarket shows that over two-fifths of students who did not receive any financial education while in school, feel it would have made them more financially confident if they had. Financial education is a critical part of the solution and just one of a wider package of tools available that help young people to maximise their income, check any entitlements they are eligible for and reduce costs where possible. Through our Money House and Money Works courses and partnerships with companies such as Comparethemarket, we are helping 16–25-year-olds to safeguard their overall well-being and build positive financial futures.”