Recession creates more savvy 20-something savers

Recession sees development of new generational trend - Young, Ultra Forward-Thinking Savers - 20-somethings saving almost a fifth of their monthly salary for specific goals.

Coming of age in the economic downturn has created a new breed of responsible, serious and ambitious 20-somethings, according to research by Barclays. Characterised by their focus on achieving life goals, these young adults have an engrained savings habit and a more responsible attitude to life than previous generations.

According to social trends analysis and research, almost a third of 20 to 29 year olds (32 per cent) are Young, Ultra Forward-Thinking Savers, or YUFTIES. They are saving an average of £258 a month - or 17.7 per cent of their monthly salary - towards specific life goals they plan to achieve over the next 10 years. In addition to this Barclays savers in this age group currently have a savings balance of over £1,900. They are ahead of previous generations on achieving life goals and are urging their fellow 20-somethings to follow their lead, with 83 per cent saying their generation needs to get better at saving.

Andy Gray, Head of Savings at Barclays, said: "It is clear that there is a new mindset developing amongst young people following the credit crunch, with a strong savings ethos driven by a desire to achieve very specific life goals. It is great that we are witnessing this generational shift, with 20-somethings taking a serious approach to saving.

"Despite higher incomes, saving becomes a much more difficult process in our 30s due to increased demands on our finances - our figures show that the savings of those in their 30's don't increase at the same rate as their salaries. Developing good saving habits now is a skill that will benefit the YUFTIEs throughout their lives as a result of the nest egg they build. These 20-somethings have a clear message for the rest of their generation - start saving now."

According to the research, the YUFTIES are highly ambitious when it comes to what they have done, or are aiming to do, by the time they reach 30:

24 per cent have already purchased their first home and a further 35 per cent want to have done by the time they reach 30 - six years earlier than current forecasts without financial assistance from parents

23 per cent want to be on the second rung of the property ladder by the time they are 30, although just four per cent currently are. Older generations surveyed achieved this at an average later age of 32

23 per cent are married and a further 43 per cent want to be by the time they reach 30, in line with the current national average

26 per cent have children and 34 per cent want to have them by the time they reach 30, again in line with the current national average

The research found that those already on the property ladder were saving more than those who are living rent-free with family or friends or living in rented accommodation (£321 per month versus £251 and £214 per month respectively).

90 per cent of the 20-something savers questioned expect to need to cut back on spending to achieve their goals, yet just seven per cent said they would reduce their contributions to long-term investments or ISAs. Instead they said they would cut back on socialising (58 per cent), shopping for clothes and toiletries (43 per cent) and grocery shopping (20 per cent), demonstrating how committed they are to saving and their financial future.

Andy Gray said: "Quite rightly two thirds of YUFTIES are proud of how they manage their money and perceive themselves to be better at managing their finances than most people they know. At a time when every penny counts, we encourage people to take full advantage of the various savings options available to them from instant access accounts to fixed rate bonds and ISAs."

YUFTIEs looking to take full advantage of their tax-efficient savings should opt for one of Barclays new cash or investment ISAs. Our Golden ISA Issue 3 pays 3.25 per cent AER tax free. Alternatively, investment ISAs are available through the enhanced Barclays Investments Online platform where savers can access a range of tax-efficient funds and keep track of their portfolio 24 hours a day, seven days a week.

Customers can apply for the highly competitive Barclays Golden ISA Issue 3 through Barclays branches. In addition, Barclays current account customers using online and telephone banking can apply online at barclays.co.uk/savings. For further information on Barclays Investments Online please visit barclays.co.uk/investments.