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13 October 2021

How to build financial resilience in your 20s – as report says young people face ‘uphill battle’

13 October 2021

Rising student debt and soaring property prises were already a huge concern for young people. Throw in the pandemic and more looming living cost hikes, it’s little wonder they’re anxious about their financial prospects – and nearly half (47%) of 18-30-year-olds have low financial resilience, according to a new report.

Ben Glover, deputy research director at Demos, who released the report, supported by Yorkshire Building Society, said amid the current cost of living crisis young people were facing “the greatest uphill battle”.

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Low financial resilience doesn’t just mean you’re less prepared for sudden changes in circumstances or big costs. It can also cause a lot of anxiety and impact a person’s overall wellbeing.

But there is hope. We asked money experts for their top advise on building financial resilience in your 20s…

Make a plan“Sounds obvious, but the best thing younger people can do to help feel more financially resilient is to have a plan,” says Vince Smith-Hughes, retirement and savings expert at Pru (

This doesn’t mean you’re going to solve all your problems overnight, and your circumstances and priorities might change as time goes on. But this is a vital first step towards empowering yourself with a sense of control. Chances are it will be baby steps towards your goals – but setting those goals is a start and even baby steps add up.

Examine your spendingWhere is your money currently going – are you keeping track? Or do you keep tapping that debit card until your bank texts to say you’re in the overdraft again?

“Small changes, such as taking a close look at your outgoings to track where spending can be reined in, is a good place to start. Make judgements on what is really necessary, and what isn’t, and incorporate this into your daily spending,” says Tina Hughes, director of savings at Yorkshire Building Society. “Review monthly direct debits and subscription services and keep only those that you can justify.”

Budget, budget, budget!From there, you can plan out how much is left after your absolute essentials and decide how you want to divvy it up between other living costs and savings. Whether you use a spreadsheet, diary and pen, or an apps like Monzo, Yolt and Money Dashboard, making a budget can transform your money habits and confidence.

Hughes suggests considering how you might keep hold of “good lockdown habits” here. “In lockdown, many of us found trips to the hairdressers, trips to the gym and evenings in restaurants were out, and instead home haircuts, workouts and cooking from scratch was in,” she says. “Maintaining lockdown habits will make a worthwhile change to your finances.”

But be realistic tooThat said, budgeting wisely doesn’t mean stripping all joy from your life. Seeing friends, doing nice things and eating decent meals are all vital for wellbeing too. Being too ambitious with your budget could quickly backfire. So be realistic – but be mindful and creative too and strike a happy balance. A shopping habit that’s racking up debts probably isn’t doing you much good. Walks, coffees and the occasional meal or cinema trip with friends are soul-soothing and good value, especially if you look out for offers and deals.

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Make your ‘emergency pot’ top priority“Part of your plan needs to be putting money aside regularly – the rule of thumb is to build up a pot of around three months’ salary, which will help with any short-term unexpected bumps in the road,” says Smith-Hughes.

Some people call this an ‘emergency pot’ or ‘rainy day’ fund – so you know you have enough to cover yourself for a few months should you suddenly lose your job, need time off, need to find a new home quickly in the event of a break-up, or fork out for unexpected costs like dental treatment. It’ll be a weight off your mind and will cushion you from having to suddenly borrow.

Make saving a habitWe know it can be frustrating being told to save when you’re barely managing to pay bills, and don’t have ‘Bank of Mum and Dad’ to tap into. But this really is the most important element of your financial resilience – and like all habits, it’s consistency that counts. “The most important thing, especially at the start of your career, is to just get into the habit of saving; even a small amount of an extended period could help make sure that bump doesn’t turn into a crater,” says Smith-Hughes.

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It’s never to early to think about your pension“For young people, the thought of saving for later life will either seem impossible or will be the last thing on their minds,” acknowledges Georgie Burks, head of marketing at Penfold. “[But] it is still important for people to start saving into a pension as early as they can, even if that means just £1. This is because of the power of compound interest, which means the pension grows by generating more money from each investment, on an ever-expanding basis – your interest starts to earn you interest – the earlier a person starts to save, the longer their investments have to do this.”

Burks says you can always alter or pause these payments when you need to. Retirement may seem way off, but your future self will certainly thank you for starting early.

Think about your relationship with money‘Money whisperer’ Emma Maslin, who teamed up with Lloyds Bank on their recent ‘Making a Statement’ financial wellbeing campaign, suggests thinking about our relationship with money on a deeper level, and how your family’s financial background might be influencing you. This can help us identify our personal blocks and goals, and enable us to be much easier on ourselves about where we’re at.

“There’s no one-size-fits-all solution. Personal finance is personal, so there’s no ‘right’ way to achieve better financial wellbeing, especially as our emotional relationship with money is very unique and defined by individual experiences,” says Maslin. “Think of financial wellbeing as an ongoing journey, rather than the destination, but ensure you take consistent steps in the direction you want to travel.

“Tune into your self-talk,” she adds. “We often have the harshest financial conversations with ourselves – listen to this voice inside your head and learn to practice acceptance of your current reality without being critical.”

Talk about it

Talk to others about money too. We so often don’t – but that just means we’re shouldering our worries alone and could be missing out on helpful conversations. “Financial planning can cause a lot of stress for many, but don’t struggle on your own,” says Nigel Borwell at Local Financial Advice ( “A financial adviser will be able to help you understand your financial matters and outline a path to meet your goals.”

Chat with friends too. “Use friends as a ‘commitment device’ for building new and healthier financial behaviours. Share your financial goals, hear what others are struggling with and find solutions for each other with fresh eyes. We never know if others have the same problems as us if we don’t talk about what we are going through,” says Maslin.

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