The Younger Generation are Financially Sharper Than Their Parents

by Mark Johnston

The number of sales to first time buyers has fallen to the lowest levels for nearly 3 years, according to many estate agents.

This is perhaps surprising as many banks and building societies have been gradually relaxing their lending criteria recently and also making more mortgages available to those with smaller deposits.

Yet there still is no signs of a stampede, this may be partly because consumer confidence has been shattered by the governments spending cuts, the euro crisis and partly because the best mortgage deals are still to be found with the highest deposit demands.

Household budgets are also under strain as wages have failed to keep pace with living costs, making it tougher for would be buyers to save a deposit.

Safe home income plans has revealed that first time buyers now need to pay 7 times more than their parents did to get on to the property ladder.

This is a concern as first time buyers are the lifeblood of the property market and so much other economic activity, from furniture sales to DIY, hinges on the hosing market.

Richard Marriott, head of savings at Nationwide, recently suggested that Brits should try to save as much as they possibly can, even if it’s just £10 a month. This is because saving a small amount each month can benefit consumers in the long term as it can act as a financial safety net.

According to Andy Pratt, chief operating officer at Alexander Hall, an independent mortgage advisor, “there has been quite a lot of evidence that people who have been renting have been putting in to savings accounts to save for their deposits”.

Recent research has revealed that younger people are defying the challenging economic times by balancing their daily spend with saving for the future.

The research, which was carried out by Aviva, showed that 25-35 year olds are more financially aware than ever before and have combined short term financial security with long term goals. Up to 50% of them have started saving for retirement, either through a workplace pension or a private personal pension.

This particular generation it seems are laying the groundwork for their financial future, managing debt and budgeting their day to day spend. Many are using a significant proportion of their income to save for the future.

When asked, 89% of 25-35 year olds said they hold a savings account and 41% have invested in a cash ISA. Over a third of this age group admitted to saving to buy a house, with 34% aiming to pay off their debts and 20% were trying to pay off their existing mortgage as quickly as possible.

Paul Goodwin, Aviva’s director of workplace said “this generation has the ability to make a real difference to their standards of living right up to and through retirement, if they continue to put money aside now for the long term”.

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