Two in five of 16–27-year-olds lack confidence to make financial decisions

New research by Yorkshire Building Society has suggested that almost two in five (39%) 16–27-year-olds, twice the rate of the general population, said they lacked confidence needed to make important financial decisions.

This lack of knowledge and confidence is reflected in their behaviours, just half (56%) said they know how to budget and a similar number (58%) said they had set themselves financial goals. Across key financial topics, including savings, budgeting, credit, interest, debt, tax, mortgages, pensions young people were less knowledgeable than the general population. This is despite financial education being on the secondary school national curriculum since 2014.

Some of this lack of knowledge could be having negative long-term implications. Young people are more likely to report having some form of debt than most other generations and over a third report falling behind or missing at least one payment in the year across a range of types of debt. Student loan was the most common form of debt reported (49% of respondents), yet only 23% of young people said they felt knowledgeable about them. Over a third of people with student loan debt said they had missed at least one repayment in the last year and 15% of 24-27 year olds with student loans owed over £20,000 in this type of debt.

Young people were also more likely to have experienced and fallen victim to online scams and identity theft than other generations – suggesting that although they spend more time online, they are not doing so with knowledge of how to stay safe.

According to the research, young people are also less likely to know where to turn for support on financial issues.  Two in five (40%) say they don’t know who to ask for financial advice, compared to only a quarter (24%) of the wider population and two-fifths (41%) say they don’t know who to trust for financial advice, compared to a third (32%) of all adults.

Most 16–27-year-olds agreed that when they were younger, family members were the main point of call for financial advice (58%). This beat out schools (19%), friends (18%) and online content creators (11%). However, when asked who should be responsible for this advice, formal education came out on top (53%).

A review of the National Curriculum is underway, and Yorkshire Building Society is urging the Government to review the current provision and depth of financial education available to pupils.  Financial education is currently on the curriculum for secondary schools in the UK. However, in Scotland and Wales, financial education is on the curriculum for both primary and secondary pupils.

Chris Irwin, Director of Savings at Yorkshire Building Society said “This research shows how important it is to talk with young people about money and help them gain an understanding of important financial topics such as savings, debt, interest and tax.

“With such high numbers of young people expressing a lack of confidence in their knowledge in key areas of finance and falling into potentially damaging behaviours it is clear that young people need to be entering adulthood armed with more knowledge and confidence when it comes to money.

“The number of young people who simply did not know where to turn for advice or rely on their family for input was also an area of concern. The majority of people we polled agreed that schools were best placed to deliver financial education.

“In our recent report – Saving Generation Z – how 16–27-year-olds spend and save – we called for the Government to improve financial education in schools by making it part of the national curriculum in all primary and secondary schools across the UK and improving the breadth and quality of the learning provided. We hope that this will be included in the curriculum review so all young people enter adulthood feeling confident about their knowledge of finances.”