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Punter Southall Wealth
In the midst of the pandemic we are all wondering how our lives will change as we “go back to normal”, but our younger generations may be feeling the most apprehensive.
Younger graduates entering the employment market may face a tougher time over the next few years that could inevitably impact their longer-term career prospects. As a result, it may be that they seek further education prior to entering the workplace or re-consider how best to attain that dream job. With on-the-job training and apprenticeships currently few and far between, future plans may need to be revised. One positive aspect is that for any student debt they accrue, repayment of the loan will not begin until their earnings level exceeds the minimum threshold.
In addition, younger people working in the hospitality industry will have seen their income significantly reduce. They no longer have that provision available to support them whilst studying, potentially putting more pressure on their borrowing.
However, on a positive note, the pandemic has made us all consider the power of money much more, especially retaining those cash reserves for a rainy day. With the speed and ease of spending rapidly increasing with the rise of online shopping, younger people were renowned for not retaining cash for too long. This mindset is now gradually shifting as the need for savings has become paramount.
We believe that the route to success lies in informing and empowering these young individuals.
It is therefore a good time to financially educate our next generation and assist them in making provisions for their futures. A good place to start is with those individuals fortunate enough to be in employment. Auto-enrolled pension schemes set up by employers are a good way to start pension planning, maximising on the pension contributions the employer is willing to make. The earlier an individual starts to plan for retirement, the greater the level of benefit they will see when they get there.
We are not yet certain how the pandemic will impact the housing market; however, we could see a decline in house prices. This will make it easier for individuals to get onto the housing ladder. Lifetime ISAs (LISAs) will allow individuals to save efficiently towards a house purchase, making this goal more achievable.
It is not uncommon for parents and grandparents to assist the younger family members financially. Perhaps with some of the family furloughed, this is something they wish to do now more than ever. However, their key concern is often how sensible the individuals will be with the money and if they will use it wisely within their future plans.
We believe that the route to success lies in informing and empowering these young individuals. By educating the younger generation and formulating a future plan, we can help them to determine how these funds can be used to change their future lifestyles.
There is no right age to start building a financial plan and to save; it can be done at any time, but the earlier the better. With products such as Junior ISAs (JISAs) available on the market, this gives even the youngest family members the chance to start building future provision.
Katie Santy, Chartered Financial Planner
This communication is prepared for general circulation and is intended to provide information only. It is not intended to be construed as a solicitation for the sale of any particular investment or as investment advice and does not have regard to the specific investment objectives, financial situation, and particular needs of any person to whom it is presented. Tax treatment will depend upon individual circumstances and may be subject to change in the future.
Please also note that the value of investments, and / or the income from them, can fall as well as rise so you could get back less than you invested. The past performance of an investment should not be relied upon as a guide to its future performance. Unless indicated otherwise, comment and opinion in this publication is based on HMRC’s tax regulations for 2020/21 tax year and future proposals.
This communication has been approved and issued by Punter Southall Wealth.
©2020 Punter Southall Wealth is a trading name of Punter Southall Wealth Limited, which is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales No. 5374633. FCA Registration No. 478840. Registered office: 11 Strand, London WC2N 5HR. A Punter Southall Company.