Young People Feeling Better About Finances
The Office for National Statistics has just released a report on ‘young people’s well-being and personal finance’ revealing that Millennials are progressively feeling better about their present financial situation.
The report tracks data based on opinions drawn the ONS’ measures of young people’s financial wellbeing, both perceived and actual. “28 measures of well-being for young people aged 16 to 24 within 7 domains” are tracked, including “2 self-reported measures of financial situation”.
This latest report shows that currently “8% of young people in the UK were finding it difficult or very difficult to get by financially in 2013 to 2014, down from 15% in 2009 to 2010”.
Interestingly, one of the largest positive changes in the number of those “finding it difficult or very difficult to get by financially” was among unemployed people. 39% in 2009 to 2010 were claimed to be struggling, down to 26% in 2013-14.
The type of accommodation that a young person is living in does have a noticeable effect on their perceived financial well-being. Just over 20% of young people living in social rented accommodation rated their financial situation as difficult or very difficult, compared to an average of around 7% in other forms of accommodation, including private renters and home owners.
Among these others, the portion finding financial life difficult or very difficult differed only marginally, but the portion feeling “comfortable or alright” as opposed to “just getting by” differed more drastically.
60% of young people in private rented accommodation found their financial situation to be comfortable or alright, compared to 72% of those living with their parents, and 80% of those living in homes they owned, whether with or mortgage or without. Compared to 2009 levels, the figure for those living with parents has gone up from 66%, but for the other two has remained broadly the same.
All of these figures show that the gap between the perceived financial wellbeing of younger and older people is slimming, slowly but surely.
Indeed, the report said: “Over the last 5 years…the proportion of people aged 65 and over reporting that they are relatively satisfied with their household income has decreased slightly whereas…the proportion of 16 to 24 year olds has increased.”
And there are signs that it is not all in perception: unemployment among the younger generation has been falling in recent years, with the number of 18 to 24 year olds without a job falling from 20% to 15% between 2012 and 2015.
Wages are up as well; the median income for a 16 to 24 year old has increased by £2,000 to reach £15,500 in 2013/14, compared to 2009/10. Over the same period, “median financial debt of young people…decreased from £3,000…to £2,600”. The percentage of young people with any debt was at 32% between 2012 and 2014, but only half of these people saw their debt “as a heavy burden”.
The average debt to income ratio among younger people is still the highest of age based demographic, at 0.40, but this has fallen from 0.47 between 2009 and 2014.
The ONS did warn, though, that the data, while positive and certainly useful, may not be wholly representative.
It said: “It is clear from these figures that although young people’s self-reported financial well-being may be relatively low when compared with older people, there have been improvements in a number of aspects of their financial and personal well-being for 16 to 24 year olds as a whole. However, this general improvement may not fully reflect the experiences of young people in different economic situations.”
All of this data does go to show that younger people are beginning to be advantaged by steady economic improvement, enjoying the fruits of the post-crash pick-up. However, while there is tangible improvements in the perceived rating of their present financial situation, looking forwards, not much has changed.
“There have been no significant changes in how young people think their financial situation will be in the future” the ONS said, “regardless of employment situation.”
Broken down by employment demographics, students are currently the most likely to be satisfied with their financial situation but also the least likely to think that they will be better off in the future (13% believe they will be worse off).
Unemployed and ‘economically inactive’ young people are most likely to think that they will be better off in the future (6-7% believe they will be worse off).