Educational article

Young people believe having savings is key to a successful life

Young people believe having savings is key to a successful life.

Let’s talk about risk

The value of your investments can go down as well as up, and you may not get back what you originally invested.

Despite its flexibility, variety and tax benefits, ISA take-up is declining among younger generations*. A new survey reveals some key problems which need resolving if the ISA product is to survive another two decades in the UK savings toolbox.

We surveyed over 2,000 young people aged 16-21 (the older cohort of Generation Z, born after Millennials) to gauge their savings habits. A fifth (20%) of this age group believe they “will need savings to succeed in life” but almost one in five (17%) say they save nothing at all.

In fact, of the 16 to 21-year olds who are regularly saving, six out of ten (60%) put their cash with a bank, while almost a fifth (22%) save money at home, which suggests they’re keeping their cash in a piggybank. Worryingly, four out of ten said they don’t have an ISA, which means their money isn’t working as hard as it could be. The survey suggests that a lack of knowledge and financial education is partly to blame for this trend.

When asked what ISA stands for, one in five (20%) respondents admitted they don’t know. In fact, one in six (16%) believe you need a job to be eligible to open a tax-free account and a third (33%) don’t know how much money you can pay in during the tax year.

We see a growing need for financial education, and the survey suggests young people have an appetite for it.

Over a third (36%) of 16 to 21-year olds said they would be encouraged to save money money if teachers taught them how to save at school; and a fifth (20%) would be encouraged if their family talked about it more often. In fact, it appears family members can play a key role in encouraging this age group to save as 15%  said they would be encouraged to save more if their family was better at saving money. 

Commenting on the finds, Ross Duncton, Managing Director, Head of Direct at BMO said:

“It’s vital to make ISAs more accessible and relevant for young savers if we are to stand any chance of continuing the legacy of ‘saving for tomorrow’ as a key money skill. Financial education is critical to ensure future generations understand the value of saving for the long term from an early age.”

“Our findings highlight knowledge gaps that we must fill if we are to empower young people to achieve their life goals. For example, when asked which type of ISA can help you save the most money over 10 years, more 16-21s picked a Lifetime ISA (20%) than Stocks & Shares ISA (14%), when in reality this may not be the best option for them.”

“Perhaps now is the right time to simplify financial terminology to help young people understand their options better. After all, understanding your options is key to making sure you are picking the right savings products to make your money work as hard as possible.”

“Society has a collective responsibility to help youngsters learn about different ways to save, particularly 16 to 18-year olds as they transition to adult saving products. Everyone can play their part – financial providers, teachers, parents, as well as young adults themselves when they take control of their own money.”

Tips for young people opening an ISA

  1. Remember four key things you need to open an ISA: your National Insurance number, proof of ID, proof of address and a minimum of £1 to put in it!
  2. Research the product that’s right for you: take your time comparing different options and providers before committing to the one that best suits your needs. If in doubt, seek advice from
  3. Record how much you’re saving for each month: set yourself money goals to maximise the benefits of the tax-free wrapper (up to £20,000 in a tax-year), for example: £5 per week would yield £260 in a year.

*ONS data projects the UK population of 16-21 year olds will grow by over 10% in the next 20 years:

  1. According to ONS population data, there are currently 4,646,597 people aged 16 to 21 in the UK. Source: Estimates of the population for the UK, England and Wales, Scotland and NI, Mid-2017:
  2. According to ONS population projections, by 2039 there will be 5,183,878 people aged 16-21 in the UK. Source: National Population Projections Principal and Variants, 2014-2039:

Let’s talk about risk

Past performance is not a guide to future performance. The value of your investments can go down as well as up, and you may not get back what you originally invested.


Confused? Our handy glossary can help explain investing terms.

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