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Being young is supposed to mean you can enjoy life without a care in the world — sadly the finances of Millennials and Gen Z make this virtually impossible. Younger people have horribly tight budgets, and are falling worryingly short on several fronts.
The root of many of their problems is the cost of property.
Starting out in adult life they tend to have lower incomes. This has been the case for every generation, but younger people now have to stretch this to cover sky-high rents. As a result, they have very little cash left at the end of the month.
The Hargreaves Lansdown Savings & Resilience Barometer shows that adult Gen Z (aged 18-29) and Millennials (30-45) have an average of £171 left when they’ve covered all their costs — compared to £277 among Gen X (aged 46-60).
It makes it incredibly difficult to put money aside to buy their first home, and for those in this age group who are forced to keep renting, it takes a toll. They have just £77 left at the end of the month on average. Just 28% have enough life cover, 17% are on track with pensions and 46% have enough savings.
Read more: What April's rise in household bills means for your savings
Even when they get onto the property ladder, they’re not out of the woods. They buy a home much later than previous generations — at an average age of around 34. At that point in life, on average, their first child will be approaching school age and their second will be in the expensive childcare years.
Higher property prices and mortgage rates put them under real pressure. Some 21% of adult Gen Z and Millennials who own a property are worried about their debts — and have average monthly debt repayments of £289 compared to 16% and £224 among Gen X.
Overall, these age groups are likely to be falling short in every aspect of their finances, but some gaps are particularly worrying. Only 31% have enough life cover, compared to 49% among Gen X. Given how many are likely to be parents, it means if they were to pass away, they could be causing real difficulties for those they leave behind.
The long-term is also worth seriously considering, because only a third of Gen Z and Millennials (33%) are on track for a moderate retirement income.
What you can do
You’d be forgiven for thinking there’s very little you can do about this, because you can’t insist you’re paid more — or magically bring down the cost of property. However, there are still some options.
For life cover, it’s a good idea to check what’s available through work. Some will offer death-in-service cover, which offers enough protection. Others will let you top this up at a relatively low cost, so see what they’ll do.