Being financially responsible isn’t just a skill, it’s a necessity. Here at Aldermore, we believe that the more you know about finances, the more you can achieve. Having a good relationship with money in your younger years can set you up for a lifetime of financial success.
In our recent Savings Tracker*, we discovered that one in five of the UK’s youngest adults (Zoomers/Gen Z) have no savings. Plus, one in four are saving less now than they did compared to a year ago.
So, whether you’re wondering how to teach your teenager the value of money, or if you’re a teen yourself and seeking some money management skills for young adults, keep reading as we give some top tips on financial literacy for young people.
Having savings to fall back on can help bear the weight of unexpected changes in daily costs or support in working towards a substantial cost, like a new piece of tech or a holiday.
The earlier you start your savings journey, the better. Not only can you benefit from things like compounding interest, where your savings interest helps you generate even more money, but adopting it into your behaviour early on can make saving feel less like a chore and more like second nature.
There are a lot of acronyms and terminologies used in finance that can be confusing. While you may not have an immediate need to understand everything in earlier years, it helps to have a general understanding of what certain words and phrases mean.
If you see something that you don’t understand, try searching it. Then, when the time comes to pursue it, you’ll be fully aware of what it is and how it works.
When you’re young, plans for retirement rarely cross your mind. But, it’s important to start thinking about your future in advance so that you can fully enjoy that well-earned retirement when it inevitably comes.
Pensions, for example, are the number one way to secure an enjoyable retirement, so if a private pension is available to you, the earlier you start your contributions, the better.
Of course, you may not currently be in a position to voluntarily give any additional funds to a pension, especially if you have more immediate financial obstacles to overcome. However, it’s important to be aware of your retirement age, which you can track on the government’s website.
While you’re young and free, the last thing you’ll want to do is tie yourself down with pesky financial barriers and rules. But, as you get older and start developing additional costs, you’ll thank yourself for getting a grasp on your spending habits in your younger years.
Making an impromptu purchase is much easier when you’ve got fewer monthly outgoings to consider, but this always incurs a risk of having such behaviour continue as you get older. That’s why it’s good to get a firm grasp on exactly what you spend your money on, to prevent things from quickly scaling out of control in your later years.
You’re likely to incur a few debts and bills in your lifetime. From student loans to car finance payments, everyone borrows money to some extent.
While taking these out, your lender should walk you through the conditions of your agreement, which includes when payment will be due, how much, and what happens if you don’t pay.
Paying bills on time is not only beneficial to your financial planning, but it can also avoid some serious penalties. For one, missing a bill payment can be picked up on by credit agencies and may affect your credit score. Secondly, depending on how many payments have been missed, your lender can even take legal action against you, sometimes resulting in a County Court Judgement (CCJ).
So, try your best to get used to the idea of either paying your bills early or paying them on the date and time that they’re due. Standing orders and direct debits can help!
Standing orders are regular fixed payments you set up with your bank, while direct debits let companies collect varying amounts from your account with your permission – both can help avoid being caught out by missed payments.
While you’re probably aware of the mechanics of a savings account, remember that there are different kinds available.
That’s right, if you’re over the age of 18, you’re not just restricted to the usual personal savings accounts like easy access savings. You can also open many different types of Cash ISA, which offer tax-free interest on your savings.
It’s helpful to find the right balance of different account types that fit your needs. For more frequent withdrawals and deposits, an easy access account should suffice. However, if you plan on saving for the long-term, a fixed rate account might suit better.
We offer all these account types, as well as tailored support for those that need it.
* Research conducted on behalf of Aldermore bank by Opinium Research between 15th - 21st January 2025 among a nationally representative sample size of 3,000 UK adults.