Menu X

Can Financial Planning ease money related angst in the younger generations?

Amidst a cost-of-living crisis, house prices inflating faster than incomes, and a backdrop of political and environmental unease, money and finance related anxiety is all too common amongst the UK’s younger generations.

In particular, financial security and retirement planning appear to have been impacted. Studies suggest a third of 1618-24 25 year olds felt stress about money, with over half having totally resigned to never achieving financial security.

The cost of living crisis has been cited by many young people as a source of financial anxiety, with COVID-19, war in Ukraine and recent political uncertainties no doubt exacerbating this.

As a result of this, feelings of hopelessness amongst young people is perhaps unsurprising, with many feeling that their future financial position lies in the hands of factors beyond their control.

However, financial confidence may not be entirely out of their hands. One of the major reasons young people feel uncertain about their future appears to be due to Financial Illiteracy. A 2023 LIBF study found that the majority of young people felt education about pensions, mortgages and other financial aspects should be increased in schools.

It comes as no surprise then that research conducted by Royal London (2023) found 22% of the 18-24 year olds surveyed did not know if they were saving enough to retire comfortably. Moreover, many of those enrolled in a workplace pension scheme were unaware of where their pension contributions go.

Gaining a better understanding of finances in your younger years can provide clarity about your future and alleviate some of the fear of the unknown. However, with the myriad of financial products available, and all of the rules and jargon they entail, it can be overwhelming and difficult to know where to start.

Below are a couple of pointers all young people (and everyone else!) should know:

Compound Interest – It pays to start early

Compound Interest is exactly what it sounds like: Interest on Interest.

Think of it as a snowball effect – no matter how small it starts, as it rolls it gets bigger, which in turn allows it to keep growing bigger. The longer it rolls, the bigger it gets, and it’s the same with compound interest.

Compound Interest has the potential to make a dramatic difference to your pension pot, but making the most of it isn’t about putting as much in as possible, it’s about putting it in as soon as possible, and leaving it to grow as long as possible.

That’s not to say don’t pay more in if you can afford to, but the main takeaway is starting early pays off.
In fact, according to the Department for Work & Pensions, ‘someone who starts saving at the age of 21 and then stops at 30 could end up with a bigger pension pot when they retire than someone who starts saving at 30 and doesn’t stop until their retirement.’

If you’re older than 21 – don’t worry, its never too late, but the sooner you start making contributions the more chance it has to grow.

An additional benefit to compound interest for young people is it can help make planning for your future more affordable. As discovered, many are unfortunately having to sacrifice saving due to short term costs. However, compound interest means that saving even a small amount into your pension at a young age can grow to a comfortable retirement. The same can also apply to other products such as ISAs, but more on those later.

A pension is a long-term investment which cannot normally be accessed until you reach 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.

What if I don’t have a workplace pension?

If you’re self employed, a freelancer or for some reason you don’t qualify for a workplace pension,, you can open a private pension. You can even have a private pension and a workplace pension if you wish. There are lots of providers for these, and the best one for you will depend on your needs, goals and investment preferences. Danbro Financial Planning’s independent financial advisors (IFAs) can help you define these and set up the most suitable private pension for you, with yearly reviews to ensure it still fits your goals and circumstances.

The Danbro Group have been helping contractors, freelancers, sole traders and the self employed since 1999. Click here to see how we can help you.

Workplace pensions are regulated by The Pensions Regulator.

Saving for a house and other savings

As a young person, chances are you’ve heard of the ‘Help-to-Buy’ ISA, or the ‘Lifetime’ ISA, both of which are part of a group of tax efficient savings accounts called ISAs (Individual Savings Accounts).

‘Help to Buy’ was a government backed savings account to be used towards the purchase of a house for first time buyers where, upon purchase, the government would provide up to a 25% bonus. This scheme later closed to new applicants, however the Lifetime ISA remains an option for first time buyers. You can pay up to £4000 per year into a Lifetime ISA, and the government will add up to a 25% bonus to your contributions. As with Help to Buy ISAs, you can use the savings on the purchase of your first house, however unlike the Help-to-Buy, you can also use it for later life saving if you choose, as you can begin to make withdrawals when you are 60 or older.

You must be 18 or over but under 40 to open a Lifetime ISA. You’ll pay a withdrawal charge of 25% if you withdraw cash or assets for any other reason than buying your first home or aged 60 or over.

This makes up one of four types of ISA:

• Cash ISA
• Stocks and Shares ISA
• Innovative Finance ISA
• Lifetime ISA (which can be in Cash OR Stocks and Shares)

Although there is a £4000 per year savings limit on lifetime ISAs, the overall total limit for saving into ISAs for over 18s is £20,000 as of the 2023-2024 tax year, meaning you can have one of each if you so choose.

Also worth knowing is the difference between Cash ISAs and Stocks and Shares ISAs.

Cash ISAs are, as you might have guessed, ISAs where you save in cash, and earn interest on that cash. These work like Savings Accounts you might get through a bank or building society, and you don’t pay tax on any interest it gains. You can’t lose money in a Cash ISA as they are secure and don’t suffer from investment risk, however your purchasing power can reduce if inflation is above the interest rate of your Cash ISA.

Stocks and Shares ISAs also allow you to save without paying tax on gains, except rather than holding savings in cash, your money gets invested. These have the potential for greater returns than Cash ISAs, which earn up to the advertised interest rate and no more, whereas Stocks & Shares ISAs depend on the performance of the funds your money is invested in. This means the value of your investment can both rise and fall, and you may not get out the full amount you put in. However, these are best thought of as longer term investments to provide money later in your life, and in the long term they typically perform better than cash.

There are lots of considerations to be made with Stocks and Shares ISAs, including selecting the platform/provider, your attitude to risk, the portfolio of funds invested in and much more. An Independent Financial Planner can help with all of these complicated questions. Book your no obligation call with Danbro Financial Planning Today.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.

Insurance & Protection

With the property ladder being so difficult to get onto for many young people, renting is often the only option. However, this presents pressure to ensure continued income to cover rent, or to have enough of a ‘rainy day fund’ to cover rent and bills while unable to work due to injury or illness.

Did you know? Less than 70% of those aged 16-34 would have sufficient savings to cover a 25% loss of income.

Income Protection can provide cover (and peace of mind) in the unfortunate event that you are unable to work due to injury or illness. The level and type of cover can be tailored to you depending on your needs and budget. Click here to learn more about how Danbro Financial Planning can find the right cover for you.

Income Protection will usually pay up to 60% of your monthly income - up to your retirement date or the end of the policy term. If premiums stop, then cover will lapse. Protection plans typically have no cash in value at any time.

Financial Planning Now for Financial Confidence Later

We’ve already mentioned some of the specific ways an IFA can help young people above, but the upshot is having a Financial Plan in place can provide some much-needed clarity and peace of mind for your future.

There are other benefits to having an IFA. While product providers and banks can give you information about each product/account, they cannot make independent recommendations about their suitability for you.

An IFA is also not tied to any particular providers and can therefore choose the products and services that are best suited to your interests regardless of provider, while also accessing products and providers available exclusively to advised clients.

At DFP, we believe you deserve a financial planner who’s willing to work with you. You need someone who’ll listen to your concerns, understand your goals and help shape a brighter future for you and your family. Our transparent, fixed fee service is tailored to your needs, whether you’re in retirement, approaching retirement, or simply planning for the future.


Blog written by
Liam Winstanley
Director & Independent Financial Advisor at Danbro Financial Planning | Website

Liam Winstanley is a Chartered Financial Planner and Independent Financial Advisor. He has worked in financial services for well over two decades, specialising in wealth management and financial planning including things like pensions, investments, retirement planning, financial protection and estate plans.

Liam is the Director of Danbro Financial Planning and is passionate about delivering the very highest standards in service, ethics and professionalism within the financial sector.

Away from Danbro, Liam is an avid long-distance runner and also turns out for his local cricket side, Brinscall CC. He lives in Lancashire with his wife and son.


Important Information

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.

The Financial Conduct Authority does not regulate tax advice.

Danbro Financial Planning Limited is an appointed representative of the Sense Network Limited, which is authorised and regulated by the Financial Conduct Authority. Danbro Financial Planning Limited is entered on the FS Register ( under reference 796167. The information contained within this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK.

The Financial Ombudsman Service is available to sort out individual complaints that clients and financial services business aren’t able to resolve themselves. To contact the Financial Ombudsman Service, please visit

Company number 11009261 registered in England. Danbro Financial Planning Limited Registered office address: Jubilee House, East Beach, Lytham St. Annes, United Kingdom, FY8 5FT.