The financial landscape has changed dramatically over the last 10 years and it appears that both the UK and the US are breeding a generation of forward-thinking savers.
Recent research by Barclays has shown that almost one third of the UK’s young adults are now putting aside up to one fifth of their monthly salary to meet specific savings goals.
The social trends analysis found that 32.2 per cent of 20 to 29 year olds are now putting aside an average of £258 per month and that these savers have a very clear idea of the financial position they want to be in by time they reach their 30s.
Furthermore, the study also showed that those that are already on the property ladder were actually saving more than those that were either living rent free with family or friends or living in rented accommodation, which suggests that homeowners in this age range have a more responsible outlook on their finances.
And it appears that these young savers are so determined to reach their financial goals that they are even prepared to make lifestyle sacrifices with 90 per cent expecting to have to cut back on spending to achieve their goals.
58 per cent have said that they would cut back on socialising, 43 per cent would curb their clothes and toiletries shopping whilst 20 per cent would sacrifice part of their weekly grocery shopping to help meet their savings targets.
Further evidence has shown that this is the ideal age range to maximize savings as, although income generally increases as people reach their 30s so do the demands placed upon their finances. This means that savings amongst those in their 30s do not increase in proportion with their salary.
These findings have also been replicated in the US where a national survey by Chase Slate and US News found that 81 per cent of young adults intended to save more money in 2011 whilst 73 per cent said that they would spend less.
This new found austerity could be a reaction to dramatic economic changes that have occurred over the past decade as today’s twenty-somethings will have grown up against the back drop of the tech bubble bursting, the credit boom and subsequent crunch, the stock market crash and the near collapse of the housing market.
The fact that young adults on both sides of the Atlantic are in the mindset that they should be saving for tomorrow as opposed to spending for today could be good news for a strengthening of the economy, particularly if the forecasts for increased GDP and growing interests also materialise.
And it’s reassuring to know that the, in financial terms at least, the future generations could be learning from the mistakes of the past.
