Joe Sinclair Young people are being overly optimistic about their future finances, predicting high salaries, low debt, and ownership of cars and homes at an early age, research revealed yesterday.
Joe Sinclair
Young people are being overly optimistic about their future finances, predicting high salaries, low debt, and ownership of cars and homes at an early age, research revealed yesterday.
Youngsters expect to be earning in excess of £31,000 a year by the time they are 25 years old, according to a Natwest survey of 8500 people aged 11-19.
Some 59% of respondents expect to own their own home aged 25, and 71% believe they will own their own car by the age of 21.
Debt is less of a worry than might be expected, with 31% believing they will not get into debt at all in the future and 43% thinking they will owe less than £10,000 by the time they finish university.
In reality, the current average annual earnings for 22-29 year olds in Britain are just £17,817, the average age of a first-time buyer is 28 and the average student owes £12,363 by the time they graduate.
According to economic analysis by the RBS Group, the financial "expectation gap" for total assets aged 25 amounts to at least £68,983 per person, or almost £483bn across Britain.
The survey also reveals a lack of financial know-how on rates and loans with 76% unable to correctly identify the cheapest loan option from a list of four.
Stephen Moir, RBSG's head of community investment, says the "HOPEFUL" generation (Home owning, Own car, Paid debts, Earning high, Flown nest, Unsavvy on rates, Low student debt) is in need of a reality check.
He says: "A Hopeful' generation of young people is not necessarily a bad thing, however a practical and realistic approach is crucial to equipping the next generation with the skills and knowledge they need to face the financial challenges ahead of them.
"Ultimately, the more exposed young people are to financial issues, and the younger they become aware of them, the more likely they are to become responsible, forward-planning adults who manage their finances confidently and effectively."
The MoneySense Panel found that young people in Cardiff expect to earn £38,126 at the age of 25 while those in Manchester predict average earnings of only £14,906.
Young people in Leicester are most optimistic about their future house purchasing power, with 66% believing they will own a house by the age of 25.
The canny Scots in Edinburgh are the most credit savvy, with 33% correctly identifying the cheapest loan but only 13% of those in Birmingham succeeded.
Some 7% of young people in Portsmouth do not know what debt is.
