Time for 18-25 year olds to take back financial control urges Cranwell Wealth Solutions
Young people in the 18-25 year old age group have experienced testing times of late – with the lasting effect of the 2008 financial crash, unattainable housing, higher tuition fees and Brexit all playing their part. Now, with the enormous impact of Covid-19 on their further education and employment prospects, this generation face tough times ahead.
Experts at Cranwell Wealth Solutions are seeing the effects of this on clients whose children or grandchildren fall into this age bracket.
So how can young people take back some control? The answer is three fold 1) what the government is doing to help 2) what young people can do for themselves and 3) how parents / grandparents can offer support.
How the Government can help
Chancellor Rishi Sunak’s £2bn “kickstart scheme” ambition is to create more jobs for young people and prevent a generation from being left behind. Here’s what his plan includes:
- The fund will aim to create hundreds of thousands of high quality 6-month work placements aimed at 16-24 year olds who are on Universal Credit and deemed to be at risk of long-term unemployment.
- New funding for National Careers Service – The government will provide an additional £32M funding over the next 2 years for the National Careers Service so that more people in England can receive personalised advice on training and work.
- High quality traineeships for young people – The government will provide an additional £111M this year for traineeships in England, to fund high quality work placements and training for 16-24 year olds. Plus the government will fund employers who provide trainees with work experience (£1,000 per trainee.)
- Payments for employers who hire new apprentices – The government will introduce a payment of £2,000 to employers in England for each new apprentice they hire aged under 25, and a £1,500 payment for each new apprentice they hire aged 25 and over, from 1st August 2020 to 31st January 2021. This will be in addition to the £1,000 payment the government provides for new 16-18 year-old apprentices.
- High-value courses for school and college leavers – The government will provide £101M for the 2020-21 academic year to give all 18-19 year olds in England the opportunity to study targeted high value Level 2 and 3 courses when there are not employment opportunities available to them.
More information can be found here – https://www.gov.uk/government/publications/a-plan-for-jobs-documents/a-plan-for-jobs-2020
So while youth unemployment is going to be an enormous challenge for the country, the help is starting to build. It is hoped that some of these schemes will benefit many, but there is also action young people can start to take themselves…
How 18-25 year olds can help themselves
- While the world may feel unstable at the moment, in many ways we have come together so much more. Community spirit is high, so why not capture this sentiment and write to companies or individuals via Linkedin within favoured industries to ask if you could gain valuable work experience. It is worth reminding them of the government schemes when you make an approach.
- When you do find regular employment, begin contributing even a small amount to a pension straight away. If you meet the criteria, your employer will also help by paying into the pension for you. While the amount may seem small, with growth over a number of years, it all helps. By starting your pension in your early 20’s you are providing yourself with so many more choices for the future.
This example shows what could happen if the start of the regular annual contribution is delayed by 5, 10 or 15 years:
- Consider saving into an ISA for more tax efficient savings, rather than investing into cash savings accounts. A financial adviser can help guide you towards the right ISA for you.
- But most importantly, do not delay in asking for financial advice. It is a common myth that you need to wait until you have wealth to see a financial adviser; this is simply not the case. Getting advice early on will prove invaluable in setting a road map for your financial future, identifying goals and working out the most tax efficient way to achieve what you would like to in life. Meetings with a financial adviser at Cranwell Wealth Solutions are free of charge and free of any obligation.
How parents / grandparents can help
- They could potentially fund further or specialist courses and study to give you an edge over others seeking the same jobs.
- They could formulate a plan with a financial adviser to free up some of their disposable income to start to build a deposit for your first property, or consider helping siblings to buy their first property together.
- If you are still at home and paying rent, your parents could save this rent into an ISA account that you can use towards a deposit for a property in the future.
- If disposable income allows; then your parents and grandparents can also make small regular contributions into a pension for you.
- Grandparents and parents can consider using their annual gifting allowances, if they want to reduce their estate for Inheritance Tax Purposes, equally children/grandchildren can of course benefit to some extent in wills to avoid being taxed twice for Inheritance. This can easily be calculated by discussing the idea with a financial adviser.
Whatever you decide to do, the very best advice we can give is to plan for the future now. This current crisis along with the financial crash of 2008 has shown that testing times can appear and surprise us all. The more you plan for the future the better, it’s time to take back as much control as you can.
To book an appointment with a Financial Adviser at Cranwell Wealth Solutions or to discuss any of these ideas, please call 01435 866101 or email Steven Sanders at email@example.com
Cranwell Wealth Solutions has branches in both Uckfield and Heathfield and drop ins very welcome.
If you have any questions or concerns about intergenerational financial planning, Cranwell Wealth Solutions are here locally to help, you only need to ask.
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