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Why twentysomethings don't save

If we won't be able to afford what we want, why bother?

7 March 2015

9:00 AM

7 March 2015

9:00 AM

Your first pay packet, in your first ‘proper’ job, almost seems like a miracle. So much money, coming straight into your bank account, every month? But once you’ve got over the novelty and worked out how much you’ll have left after you’ve paid your bills and rent, reality begins to kick in. Every twentysomething knows they ought to be setting aside a chunk of their income for ‘savings’. But ‘ought’ is the operative word. Because most of us — particularly those living in the capital — just can’t see the point.

Why not? Well, mainly because it’s generally accepted that unless you have a helping hand from somewhere, getting a foot on the property ladder is nigh-on impossible — and why else would we save? The young who do have some form of financial security tend to be either junior bankers or the offspring of senior ones. Those who actually manage to put aside part of their monthly salary are few and far between. The main reason is the London rental market: a room anywhere within Zone 2 and a reasonable commute is going to cost a fair whack — say £650 to £1,000 a month — meaning it’s difficult to save and pay rent at the same time.

Is my generation of twentysomethings so different from those that preceded us? Probably not, but lifestyles have changed. In the 1960s, the average age at first marriage for women was 22; by 2008 it had risen to 30. With house prices as they are, it’s no surprise that the only people I know who have managed to buy their own property without parental help are those who have bought as couples. If you’re unwilling to make the commitment of marriage until your thirties, then you’re probably also unlikely to want to commit to the shared burdens of property ownership, from mortgages and council tax to finding builders and plumbers.


Much of this is London-centric: anyone who has the slightest interest in the property pages knows that our capital is now one of the world’s most expensive places to live. But is it not worth saving anyway, for a rainy day or a more comfortable future? After all, just because buying a house may not be on the cards in the next decade, it doesn’t mean that children and their accompanying costs are not. Every twentysomething I spoke to knew they ought to be saving — for the house, for the baby, for the far-distant prospect of retirement — but the reality of doing so was just too tough.

Credit cards and other financial products don’t help much, either. There’s a split among my friends between those who feel they ought to have a card for the benefit of their credit rating but don’t want to get into debt, and those who have a purse full of cards used up to the max. Savings accounts with decent rates can look attractive and some of us do try to top them up on payday — but funnily enough, as the month-end approaches, those funds seem to trickle away.

Meanwhile, our parents are surprised — if not appalled — that we’re willing to spend almost £10 on a single drink. But most people I spoke to wouldn’t describe that as willingness, more resigned acceptance. If you live in the capital, you are trapped in a Catch-22. You have five or six years’ employment under your belt; you know you ought to be growing up, getting a foot on the property ladder, being sensible, settling down. But you can’t see a way of reaching that first rung, so rather than squirreling away cash… when a colleague asks you out for a drink, or you fancy that new Topshop dress, why not? There’s no point saving for something that feels as if it’s never going to happen.

Perhaps it’s just my friends who are unusually profligate — but I honestly don’t think so. I spoke to a range from new graduates to those in their late twenties, and most seemed to have similar opinions. This piece wasn’t supposed to be about property but about twentysomethings’ attitudes to money; yet for everyone I spoke to the most important financial issue was property prices, and the cost of rent.

Don’t despair of my entire generation, though. One twentysomething described how she and her husband had saved for a house, with no help from parents, by sacrificing holidays and swapping nights out for nights in and baking. But again, she’s an example of a combined effort of two. And said house happens to be outside any of the London Tube zones. There are sensible savers among us, but the general attitude is one of spending, rather than saving. It may not be wise, but at least our landlords are happy.


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