In a world of instant gratification, it can be difficult for young people to be responsible with their money. The needs of one’s future self and loved ones do not often take priority over the wants of now.
Unfortunately, one cannot be naïve forever, and it is never too early for young people to learn the value of their money.
Parents can serve as a role model for their children during their formative years. Children often take their parent’s money for granted, and subsequently face the harsh reality of financial limitations when they grow up.
Rebecca Aldridge, managing director at Nottingham-based Balance Wealth Planning, says, “When it comes to financial advice for young people, it all starts with a good education, especially from parents. Be open about how you earn money and what you spend it on,” Ms Aldridge continues.
Understanding the value of money as children sets the stage for better financial habits in youth and adulthood. Children with a realistic view of money are more likely to grasp financial responsibilities later in life.
But once it comes time to address those financial responsibilities, young people need more help than their parents can offer. Financial products are more complicated than ever and with a great array to choose from, advice from a financial adviser is particularly valuable.
Dennis Hall, chartered financial planner at Yellowtail Financial Planning in London, says, “Young people have to realise that their situation is completely different to anything faced by their parents or grandparents. They have to take far more responsibility for their long-term future, and it means facing up to reality at a much younger age. “
Young people entering the workforce straight out of university are usually burdened with a great deal of student debt. As they begin work they will have to factor these debt payments into their budget.
Persistently low interest rates have been favourable to young people in the short term, in keeping repayments low, but this could also encourage them to take on more debt through credit cards. The low rates also act as a disincentive to saving and many young people could find it difficult to cope if and when rates do change. Advisers need to factor in a base rate change when creating a financial plan, and especially when arranging a house purchase.
