A quarter of UK adults have less than £100 put away and one in six adults have no savings, according to the Money & Pensions Service (MaPS). If adults fail to routinely tuck away funds for a rainy day or have little in the way of investment funds, youngsters with an appetite for investing will need to seek inspiration and guidance from alternative sources where investment education is more accessible, writes Keith Tully of Real Business Rescue, a company cash flow expert.
How young savers aspire to save, spend, and manage their money will be determined by influences in their world that include:
- Social media – Social media messaging can influence the behaviour and beliefs of young savers through the likes of influencer marketing and creative sponsorships.
- Targeted marketing – Marketing campaigns can be powerful when a targeted approach is taken, and the message is timely. Banking providers often try to upsell their services, pairing savings accounts with investment add-ons. This can provide a gateway into the world of investing for young bankers and spark a lifelong interest.
- Word of mouth – As family members, friends and colleagues share their experiences of investing and platform recommendations, this can inspire young adults to dabble in the world of investing. It’s easier to resonate with people that you know, as their influence will go further than the messaging conveyed by faceless product testimonials or customer reviews.
- Education – Money talk in a formal educational setting carries authority as the topic is often sidestepped when in the company of a younger audience. Educating young savers on investing from an early age can help them build a nest egg to carry them through to a prosperous future. While entertaining the topic of investing, openly and transparently discuss the associated risks and rewards of investing to keep young investors on the right track.
The MaPS report found that four in five people still struggle to talk about money – this taboo must be broken as without openly discussing investing from an early age, many young savers will lose out on a life powered by smart investments and tactical money management.
Breaking the money talk taboo
Money talk is often a taboo subject amongst youngsters due to it being a traditionally discreet and private topic. To break into the conversation of investing, the stigma around failing to discuss money talk behind closed doors must be shattered.
Money education driven by the likes of Martin Lewis, personal finance guru and founder of Money Saving Expert, has helped spark public discussion on crucial financial topics, such as borrowing, debt, insurance, risk management, tax, and investing.
Backed by Martin Lewis and the Money & Pensions Service, the first curriculum mapped textbook on personal money handling was released into state funded English secondary schools in late 2018. The textbook, Your Money Matters, shines the light on basic financial management and provides a top-level outlook on investing, including the risks and rewards.
The rise in popularity of digital and mobile app banking for young adults encourages the introduction of a wealth of investment tools and banking features that were once unheard of for a younger generation of investors. While some apps give teens the power to invest in shares, subject to parental approval, they remain closely aligned to promoting saving goals which is the first step to successful investing.
Nurturing a new generation of young investors
Research by the Association of Investment Companies (AIC) among investors aged between 20 and 40 found that 24% saw something online that sparked their interest in investing.
Over half (56%) of young investors have over £5,000 invested and this rises to 68% for those aged 30-39 years old. The majority (52%) usually use an online platform to invest and 11% use an online investment service such as Nutmeg or Wealthify.
The AIC found that Googling or an online search is by far the most popular way of finding out more (40% of respondents), alongside Instagram (19%), YouTube (18%), websites in general (13%), Facebook (13%), Twitter (8%), TikTok (8%), LinkedIn (4%) and Reddit (4%).
Technology evidently plays a major hand in the financial upbringing of young savers and can positively nurture them to make responsible investment decisions with the right guidance from the get-go. While family recommendations are high up as a key influencer, technology is leading the way.
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