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Survival vs saving – hopes and dreams crushed by cost-of-living crisis

Posted in: Corporate

  • 60% of under 40s don’t think they will achieve their hopes and dreams
  • 52% of 18-40 year-olds do not own their home, two in five of these have children
  • Cost-of-living crisis prevents young adults from saving for future – 62% point to food costs and 59% to energy costs
  • 40% say salary has not kept track with inflation
  • 18-40s more likely to save regularly (77%) than over-50s did at that age (66%)

The cost-of-living crisis is crushing the hopes of the under 40s, with six in ten people worrying that they won’t achieve their dreams.

In research conducted by Opinium for financial services company OneFamily, many said that the increasing cost of day-to-day living is preventing them from saving for their future, and nearly half said they wished they could put more money aside (45%).

Contrary to the popular myth of salaries being frittered on expensive coffees and smashed avocado, these young adults were found to be more likely to regularly save each month than their parents and grandparents did. Seventy-seven percent say that they save most or some of the time, whereas 66% of those aged over 50¹ said that they put money aside for a rainy day when they were young adults.

The older generation also saved less of their earnings, 11.8% on average, whilst today’s sensible young adults say they save nearly a fifth of their income (18%) on average. However, whilst the average 18–40-year-old has a saving pot holding a healthy £10,687, this doesn’t give the full picture. Half of those questioned hold less than £2,500 in savings – which could suggest that some might be having to dip into their savings to fund everyday costs – and a fifth cannot afford to save at all.

The cost-of-living crisis is the biggest stumbling block to saving more and achieving their dreams, with six in ten (62%) pointing to rising food costs as being a big problem. Nearly the same level (59%) find energy costs stop them from saving more and 40% complain that their employer has not increased their salary in line with inflation, meaning they’ve not been able to save when they want to.

Just over half (52%) do not own their own home with one in three (33%) of these people saying that this is because house prices are too high. Twenty-six percent are trying to save for a deposit and one in ten (12%) suggest that interest rates are making mortgages unaffordable. Around two in five (39%) of these were families with children. Homeownership is low across all ages, with a surprising 44% of those aged 33-40 stating that they do not own their property.

But could people be doing more to make their savings pot work harder for them? Just 10% of respondents hold a lifetime ISA (LISA) account, which is a tax-free savings account specifically designed to help first time buyers. It pays out a government bonus of 25% each year, up to a maximum of £1,000.

The idea behind the LISA account is that a total of £4,000 can be saved each year and these savings should be left untouched until the property purchase.

Despite a low number of the 2,000 people questioned actually holding a LISA, when the account was explained to them 77% said that they would now consider opening an account – with this rising to a staggering 84% in those who are currently renting with a private landlord.

Matthew Ellis, Sales and Marketing Director at OneFamily said,
“It’s no wonder that this generation of young adults feels like their hopes and dreams have been crushed when their priority right now has to be survival rather than saving. As we can see from the research, salaries are lagging behind the rises in the cost-of-living, and with rent to pay they don’t stand a chance in trying to put money aside for a deposit on their first home.

“So, it’s important that they squeeze as much value as they can from their savings. Since the government gives a very useful bonus of up to £1,000 each year on LISA accounts, it’s definitely worth looking into whether this might be a wise place to save their hard earnt money.”

Notes to Editors

Unless otherwise stated, all research conducted by Opinium, on behalf of OneFamily, between 17 February – 21 February 2023, among a nationally representative sample of 2,000 UK adults aged between 18 and 40.

1 Research conducted by Opinium on behalf of OneFamily between 17 February – 21 February 2023, among a nationally representative sample of 2,000 adults over the age of 50