For many young adults, financial independence has never felt further away. Rents are soaring, wages are lagging, and the dream of home ownership is slipping out of reach for an entire generation.
Add to that student debt, insecure work and the ongoing cost-of-living crisis, and it’s no wonder many twenty and thirty-somethings are struggling to stay afloat.
“Young people today are facing a perfect storm of financial pressures,” says Ali Poulton, senior head coach at Octopus Money.
“In cities like London, I’m seeing customers paying upwards of £1,000 a month for a single room on salaries below £25,000. It’s completely unsustainable and forces many to rely on credit cards, overdrafts, or the bank of mum and dad just to make ends meet.”
The list of financial challenges facing young adults is endless – but there are some practical ways to take back some control.
High rents and the housing squeeze
For many, rent eats up most of their income. “Home ownership feels like an impossible dream,” says Ms Poulton. “Rising rents make saving tricky, and when you’re paying someone else’s mortgage every month, it can feel deeply unfair.”
Even so, she stresses the importance of starting small.
“Even setting aside the cost of one takeaway or a round of drinks at the pub per week helps build the savings habit,” she says.
For would-be buyers, ISAs can help. “A cash ISA offers tax-free growth if you might need access sooner, or a stocks and shares ISA if your goal is further away,” says Poulton.
“Both can be used within a Lifetime ISA for first-time buyers, meaning you’d receive a 25 per cent top-up from the government. The key is consistency – small, regular amounts add up faster than most people realise.”
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Student debt and the weight of repayments
Loan repayments can feel like a constant drag, but Poulton says student debt “functions more like a graduate tax than a traditional loan – most will never pay it off in full, and it’s usually written off after between 25 to 40 years.”
If you’re torn between overpaying or saving, she advises balance.
“It might be worth continuing to pay off the minimum amount each month and putting any extra into a high-interest savings account or Stocks and Shares ISA instead,” she says. “This is because savings interest can be higher than your student loan interest.”
She recommends using a student loan calculator to compare your take-home pay under different scenarios.
Insecure work and patchy incomes
The rise in gig work, zero-hour contracts and freelance jobs means many face irregular pay.
“When your income fluctuates, budgeting becomes non-negotiable,” Poulton says. “The first step is awareness: check your banking app weekly, cancel unused subscriptions, and look at where you can cut back without feeling deprived.”
She suggests focusing spending on what genuinely makes you happy and setting a couple of “no-spend days” each month. “It’s not about restriction,” she says.
“It’s about finding joy in things that don’t cost money – a park picnic, a free museum, or a film night with friends.”
Rising costs and the squeeze on savings
With food, energy and housing all more expensive, Poulton says even small savings help.
“Share, swap and save before buying something new,” she advises. “Ask around or try apps like Vinted, Olio or Too Good To Go for bargains and freebies.”
Discount schemes can also stretch smaller budgets. “UNiDAYS and TOTUM offer great student deals, and supermarket points can easily turn into meals out or cinema tickets,” she says.
For students, she adds a caution to avoid splurging when a loan lands in the bank. She says: “Use budgeting apps like Monzo or HyperJar to divide it into weekly pots so it lasts the whole term.”
Practical steps to regain control
“Getting control of your money doesn’t have to mean big sacrifices,” says Poulton. “You can create small, steady systems that work for you.”
Start by tracking your spending so you know exactly where your money’s going, then build an emergency fund to cover a few months of expenses.
“Pay off high-interest debts first, and if your employer offers a pension, increase your contributions if you can – it’s one of the few ways to get ‘free money’ through tax relief,” Ms Poulton adds.
Small steps towards saving can snowball.
“This year I’ve loved Monzo’s 1p saving challenge,” Poulton says. “It’s a great example of how saving small, barely noticeable amounts every day can build into a meaningful safety net, helping you feel less anxious and more in control.”
Even amid tough circumstances, small, consistent changes can make a big difference.
The cost-of-living crisis may not ease overnight, but building good financial habits now could make all the difference for the years ahead.
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