Generation Y: the (modern) world of personal finance
What does the financial landscape of the future look like?
Only 30% of 16-25 year olds contribute to a pension. 40% of these do not know what type of pension they pay into. 80% would be interested in learning more about personal finance.
These are the findings of a recent study by the Centre for the Study of Financial Innovation (CSFI). So what is the future for personal finance? Cass Business School welcomed both the CSFI and the Chartered Institute for Securities and Investments (CISI) to discuss the results of the CSFI report Generation Y: the (modern) world of personal finance.
The debate centred around two key issues: Who is responsible for teaching young people about personal finance and what will the financial landscape of the future look like?
According to report author Sophie Robson, the results indicate one over-riding point; young people tend to look to their parents for financial education for example, 50% of young people choose the same retail bank as their parents.
Robson said; "Since young people receive the majority of their early financial education from their parents, it is important that this is information is accurate and up-to-date. After all, generation Y-ers are growing up in a very different world to that of their parents, and it is more important than ever that they feel in control and comfortable with the concept of personal finance".
Stephanie Rochford, Long Finance Community Organiser for think tank Z/Yen continued; "With an increasingly jargonised financial system, currently teetering on the edge of collapse, how can young people learn from their parents who barely understand the system themselves?"
Her philosophical approach addresses issues of longevity and sustainability within the financial system. She questions whether the current approach of modifying the existing framework would be enough to support Generation Y in their retirement.
She argued "Recent ONS data shows that nearly one in four children aged 20 in 2011 will live to be 100 years old but the financial system is still dominated by short-term thinking. Who really believes that the retirement structure that they enter into today will work effectively over that time-span? Long Finance is working to challenge short-termism and to influence leaders from the financial and business sectors to demonstrate real long-term thinking and approaches."
Jeannette Lichner author of #yourmoney explained what drove her to write her book -the lack of information available to young people on personal finance- and her desire to leave a legacy.
She said, "I believe that many people share responsibility for helping young adults be money aware. There are many people who impact each individual's approach to earning, spending and saving money - parents, friends, colleagues, etc.
"Schools have the benefit of a captive audience, who are there to learn, and that is where we can have the most impact."
This sparked lively debate across a range of topics: who should be responsible for financial education? What role does the press play in apportioning blame for the current lack of education/need for education? Are payday lenders providing a useful service or exploiting the vulnerable?
The Chair, Harriet Lloyd-Dehler of Charles Stanley, summed up, "We all greatly enjoyed the event. It was a welcome and useful discussion about some of the deep-seated financial issues that young people face and how they might be resolved. The forest of hands trying to ask questions and make contributions suggests that this theme is a rich seam for future coverage."