Places are about communities and communities are about people. Most people would agree that everyone would benefit from improved knowledge and confidence when it comes to dealing with our finances. Financial decisions people make will have an impact on their present and future lives as well as that of their family and their community. For young people leaving school, college, university and entering the workplace the challenge is particularly daunting . Money is an important part of how young people feel about their lives and the world that they live in. Having money is seen to be an essential part of achieving their hopes, dreams and aspirations. – whether setting up their own home, as apart of progressing their career, or even as a mark of responsibility and independence.

Short-term happiness or long-term saving?

There is a tension between living for the moment and not wanting to miss out versus thinking about the future and trying to be seen as responsible. The Young Adults and Money Management research published in January 2018 by the Money Advice Service(MAS) and BritainThinks identified that around half of young adults (55%) surveyed ranked managing money within their top three priorities in life. More young adults ranked managing money well in their top 3 priorities than having a job they enjoy (49%) or keeping healthy (44%). However, even more young adults (65%) ranked spending time with friends and family in their top 3 priorities than managing their money well, reinforcing that money is important but not more so than social relationships. While being a good money manager is an attractive prospect, no participants in this research thought it worth sacrificing their social life for. Money management was perceived to require sacrifice, structure and rigidity. In contrast young adults often spoke about wanting to have a thriving social life as a key contributor to their short-term happiness. This was often seen as creating a sense of conflict, presenting a choice between managing their money well and enjoying life in the short run. Where this conflict arose, young adults tended to prioritise their short-term happiness over long-term saving.

Good Money Management

Good money management therefore has something of an image problem. Many young adults imagine that the lifestyle of someone who manages their money well could be boring. One female school-leaver who participated in the MAS/BritainThinks research painted a very clear picture “At the weekend they (someone who is good at managing their money) are probably more likely to stay in and watch TV, or they cook something like spaghetti, something mid-range and not too adventurous. It is probably not the most exciting person”

Overcoming this perception will be vital to enthuse and engage young adults with managing their money well. Showing how money management can contribute towards, rather than detract from, a thriving social life will help with this regard.

At the Money Advice Service, we are seeking to meet this challenge. Our starting point has been to make sure that we have robust evidence on what works in helping young adults improve their financial capability – and just as importantly, what doesn’t. Our What Works Fund has been trialling new approaches, and working with partners to explore the channels – and the language – that best resonates with different groups including young adults. We then need to work across sectors and communities to get this message out and put the evidence into practice.

We know there are opportunities to engage young adults. Drawing on the evidence from the 2015 UK Financial Capability survey, the University of Edinburgh used the data to explore the ‘young adult’ lifestage in relation to better understand the ability of young adults in managing day-to-day finances, planning ahead and negotiating financial difficulties. Their research identified a number of opportunities emerged to engage young adults in money and develop their financial capability, including:

  • identifying ‘teachable moments’ at key points of transition;
  • making use of peer, near-peer and nominated experts;
  • developing education-based practical skills beyond the formal school environment
  • building on the role of the family as a key socialization agent;
  • addressing young adults’ (mis)perceptions of unbiased guidance and advice; and harnessing the potential of the online environment to engage digital natives.

The Financial Capability Strategy for the UK was launched by the Money Advice Service in October 2015 to bring many different people and organisations together to collaborate and take action to address these issues. The Strategy is about demonstrating the power of collective impact and understanding the role we can all play – as individuals, as organisations, and as employees and employers to improve the financial capability of the people in our communities. There is no silver bullet on this, but the foundation must be to make sure there is a genuine partnership approach with cross-sector ownership.

About the author

Steve is Financial Capability Manager of Money Advice Service, and works across the Financial Capability Strategy for the UK.

Renaisi has completed several research and evaluation projects for Money Advice Service in last few years.

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