Chat to some Babyboomers and you’d think that all a millennial had to do was give up their daily Chai latte and in a few years, they’d be merrily climbing the property ladder.
Millennials take a different view – so inflated is the UK housing market, they argue, that giving up avocado toast isn’t going to make a whole lot of difference. So they might as well forget it, live free and enjoy their edible flowers.
We did a few sums
However, we’ve yet to meet a millennial that drinks three Chai Lattes a day, and, given that they’ve usually got no or very little cash, the occasional fancy drink can feel a lot better than putting an extra £3.20 away against an average London house deposit of £92,833.
After six decades of rising property prices, the average house now costs 7.6x the average salary.
So what CAN millennials do to save?
Laura Suter, personal finance analyst at AJ Bell, says:
Tip #1: Cancel subscriptions
“First, check what subscriptions you’re signed up to. Have you actually been watching anything on Netflix lately? Do you REALLY use the full gym membership?” Reduce the pain by cancelling things you don’t actually use. The average person is paying out £50 a month in subscriptions they struggle to cancel. If you try to cancel and the company delays, just ask the bank to cancel the recurring payment.
Tip #2: Switch Bank
In trying to find money for savings, Suter also suggests millennials make use of bank account switching offers. While banks are paying low interest rates, many will offer incentives to switch your current account: “Some of these come in the form of vouchers, while others pay cold hard cash, which is more useful for many savers. For example, Halifax at the moment pays a £75 joining bonus and then £3 a month, based on meeting some criteria. There’s nothing to stop you switching multiple times, if you have the time and inclination.” Another option is to get an account that offers cashback, such as the Santander 123 or NatWest Reward account.
Tip #3: Use a saving app
Apps such as Revolut have an option whereby purchases are rounded up and the extra put in a savings scheme. This may only be a few pounds each time but can add up if you use the card a lot.
Suter adds: “The best route for young people is just to put away £30 or £50 a month to start with…It can seem daunting to invest for the first time, but by starting with a small sum and investing it monthly, you’re building the habit that will get you to the house deposit in the end.
Even small sums can build up pretty quickly.
In other words, give up the avocado and you will only make a small dent, but do build the habit and stop paying for things you don’t’ use. It’ll pay off in the long run as your salary increases and you’re able to put away more each time.
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