Young Brits are missing a trick with this one simple mistake
Research has revealed that 18-28 year olds could have earned more than £3.1 billion over the past 12 months by adopting one straightforward technique. Just 35% have opened a Lifetime ISA account, which can be used towards purchasing a first home or building a pension pot. This means 65% are going without.
The scheme sees the government add a 25% bonus to your savings, up to a maximum of £1,000 per tax year. And whilst these young adults are still managing to save £2,059 annually – they are missing out on £512.77 in free government money as a result of not opening an account.
What’s more, nearly a third haven’t heard of this method of earning extra cash. Among those saving, 18% are attempting to gather funds for a deposit on their first property, whilst 13% have already begun building towards a retirement fund.
If someone opened the account at 18 and contributed the full LISA allowance of £4,000 every year, they could accumulate as much as £32,000 in free money by the age of 50.
Rajan Lakhani, head of money at Plum, which commissioned the research, said: “There is a lot to know about personal finances, but a LISA isn’t something you want to ignore.
“It’s one of those things where the longer you leave it, the earlier you’ll probably wish you’d have got one.
“It’s not exactly completely free money as you have to do a little bit of work to set it up, and it can only be put towards a first home or a pension, but it’s fair to say the rewards often outweigh the effort.”
The typical saver is presently managing to set aside just over £208 each month. However, throughout a normal year, many find themselves dipping into their savings to meet unforeseen expenses.
Furthermore, the cost of food was identified as the primary obstacle preventing people from saving more, whilst 29% pointed to their insufficient income.
Just over a quarter (26%) are struggling with the expense of utility bills, and 18% discover their funds are depleted by online shopping.
More than one in 10 (11%) also confessed to a lack of confidence regarding their understanding of personal finance.
With 57% feeling overwhelmed by the sheer volume of savings products on offer, according to the OnePoll.com data.
Rajan added: “When you’re in your 20s, it can feel as though you have your whole life ahead of you to get on top of your savings.
“But anyone who’s in their 40s now will tell you, those years go pretty fast and you’ll wish you had started earlier.
“A little goes a long way, especially the earlier you start. Good saving habits in your 20s and 30s can have a huge impact on your quality of life when you get older.”
