Getting a fair deal? How to help vulnerable young people manage their money

1. Context
2. The study
3. Key findings
4. Points to consider

Context

Children and young people typically have lower levels of financial capability than adults, but there are some groups, such as children in care, care leavers, young homeless people or young parents, that at greater risk of financial exclusion, over-indebtedness and poverty. Other vulnerable groups such as young carers and disabled young people also have challenges with financial capability. This report explores vulnerable young people’s experiences of financial education and of managing their money, and asks how they want to be supported to improve their financial capability and avoid problems such as debt or financial exclusion.

The study

This report looks at what vulnerable children and young people think would help them become more confident in managing their money. It builds on a previous paper (Action for Children, 2014, Paying the Price) and brings together primary data from two sources, with secondary data gathered from literature on the topic of young people’s finances, to examine vulnerable children and young people’s experiences with financial education, advice and support. The two primary research sources were:

• qualitative research workshops with 44 vulnerable children and young people
• a quantitative online survey of a further 163 young people, aged 11 to 26

The report was commissioned by Action for Children, which works with vulnerable children and young people across the UK. The organisation wanted to understand, from young people themselves, what support they would need to improve their financial capability; its aim was to use the insight to influence government, policy makers and financial services providers.

Key findings

Challenges vulnerable young people face:

• Poverty: 25% of the young people surveyed said they didn’t have enough money to live on; 30% of 14-24 year olds are living in poverty
• Lack of financial education: 67% didn’t have or don’t remember having financial education at school. Financial education was also equated with maths, which many had found difficult.
• Lack of trust in institutions: 59% would not go to a bank for help with finances and 87% would not ask the Job Centre.
• Financial exclusion: Whilst most young people in the UK do have a bank account, the 8% of 16-19 year olds and 4% of 20 – 24 year olds that don’t are more likely to be poorer, dependent on benefits, in debt, have a poor credit score or be without a permanent address

What vulnerable young people want:

• Financial education and support when they need to use it: 72% of young people in the survey said they want financial education when they leave home, and 59% when they have children, compared with 27% who want it at school.
• Real life examples: 74% of young people in the survey wanted to know how to budget and 51% to know how to manage their bills.
• Help with saving: 57% wanted to know about saving money – only 13% saved money every week and 27% never save.

What should financial services do?

• Use simple and plain language
• Understand and empathise
• Specifically target information
• Be more accessible
• Develop appropriate products

Points to consider

• Relevance: The research builds on a prior study by Action for Children (Action for Children, Paying the Price, 2014). It is of particular relevance and importance as young people are disproportionately living in poverty today in the UK.
• Generalisability/transferability: This study is specific to vulnerable children and vulnerable young people, but it is likely that some of the issues will be transferable to young people in general. For example, it may be that all young people would prefer to have financial advice at the time it is needed, and to be taught with real-life examples.
• Applicability: The research can be used by any stakeholder with an interest in financial capability, or in young people, such as government, policy makers or financial services providers.
• Methodological strengths or limitations: The sample size for the online survey is small, and whilst confidence intervals are not given for the data, the results should be treated with a degree of caution. Whilst there is also little detail given about the workshops, the data from these is qualitative in nature, and the verbatim quotes given in the report serve to bring the issue to life.

Full report

Getting a fair deal? full report