Young people stay with their parents for longer

Many young people may be forced to live at home with their parents for longer in order to create a solid financial base for themselves.

Rasheed Ogunlaru, life coach and motivational speaker at rasaru.com, said that it is increasingly common for the most recent generations of students to move back in with the parents after graduation in order to pay off debts and establish a career.

He said that it is an incredibly difficult time for young people at the moment, financially speaking.

For this reason, parents need to do their best to make sure their children have a habit of saving rather than building up debt so that this period is briefer.

"One of the things I'm spotting is that many teenagers - and those in their early twenties - are not necessarily thinking about quickly flying away from the nest.  Some of them are actually thinking strategically - thinking if it is going to be in their benefit to stay [at home] and establish themselves financially first," he explained.

This goes against the more traditional process of leaving home as soon as possible.

However, staying at home for longer is having other knock-on effects such as maintaining close family relationships and young people contributing to the upkeep of the home.

Robin Ellison, head of strategic development for pensions at Pinsent Masons, agreed with the importance of young people saving money as early as they can.

He said that student debts and saving for the deposit for a first home were clearly priorities, but the sooner young people started saving for their retirement the better as the effects of compound interest are "unbelievable".

As this generation will probably be retiring five to ten years later than those reaching pension age now, they will have a while longer to save than their parents.

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2012-01-20 13:06:27 © Moneyextra.com