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It can be difficult to save at the best of times, but there are some generations that find it even tougher – so much so that concerns have been raised over the financial resilience of the late-millennial generation (those aged 25-34), with research from LV= highlighting a lack of savings and rising debt.
The figures show that 55% of this age group fall short of having the recommended 90 days' worth of savings to be financially resilient, well above the national average of 37%, with 34% admitting that they'd be able to survive for just one month or less if they lost their income.
These figures are even more pronounced among renters in this age group, with 65% admitting that they don't have the recommended savings, and 45% only able to cope for a month without an income. Some 44% aren't confident in their ability to handle a personal financial crisis, either, again higher than the UK average (33%).
Furthermore, 43% say they can't save at all, with student debt being the biggest obstacle (40%), followed by credit card bills (32%). Half (51%) have some form of unsecured debt, and one in five (20%) owe more than £5,000 on things like personal loans, credit cards and overdrafts. Indeed, double the national average are in their authorised overdraft – 21% versus 11% – which could be adding further pressure to an already stretched budget.
Despite these difficulties, just 7% of renting 25-34 year-olds have some form of income protection insurance to fall back on should they lose their income, which means many could be seriously struggling should the worst happen.
"It's worrying that so many 25-34 year olds have no idea how they would cope in a personal financial crisis, but those who rent are suffering even more," said Justin Harper at LV=. "It's clear that people in 'Generation Debt' are at risk of finding themselves struggling to make ends meet if they lost their income.
"It's vital this generation isn't overlooked, and industry and Government works together to ensure more people are able to increase their resilience to financial shocks both in the short and long term."
One way the industry is tackling this is by reforming overdraft rules, which will hopefully mean that those falling unexpectedly into their overdraft won't find it quite so difficult to get back out again. It's also thought that lending rules could soon be tightened to discourage excessive borrowing, with the growth of unsecured debt now rising at its fastest level in years.
But what can you do on a personal level to boost your financial resilience? Well, aside from getting income protection insurance, one of the easiest things to do is to start saving. Building up a pot that's equal to three months' worth of outgoings may seem challenging, but it can be done – and you've got to start somewhere!
Start by opening an easy access account that you can gradually drip-feed money into – every time you resist a lunchtime shopping spree, for example, or forgo the weekly takeaway for a home-cooked meal, put the money you would have spent straight into your savings account. You'll soon notice the balance edge up.
Or, if you really want to get into the savings habit, what about a regular savings account? This could be a great way to boost your savings while helping you get into a routine, and pretty soon you won't even notice the money leave your bank account. These deals tend to pay far better rates than many other accounts on the market, too, but just make sure you're happy with the restrictions – some penalise you for missing monthly payments, for example, and others don't allow you to access your money, so always read the small print.
Check out the best savings accounts to boost your financial resilience
Struggling with debt? Read our tips on how to overcome it, and don't be afraid to seek independent advice
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