New research has found that 18 – 28-year-olds could have netted more than £3.1bn in the last 12 months, by adopting one simple technique.
Research has revealed that individuals aged between 18 and 28 could have amassed over £3.1bn in the past year by implementing a simple strategy. A Lifetime ISA allows Brits to add a 25% bonus to savings, up to a maximum of £1000 per tax year. However, new research shows only 35% of this age group have a Lifetime ISA account, leaving a staggering 65% without one.
The account can be used towards purchasing a first home or setting up a pension. Yet, nearly a third of young adults are unaware of this lucrative method. Currently young adults save an average of £2,059 annually, but are missing out on an additional £512.77 of free money from the government.
Among those who are saving, 18% are aiming to accumulate enough for a deposit on their first home, while 13% are already focusing on a retirement fund.
If you were to open a Lifetime ISA at 18 and contribute the full amount of £4,000 every year, you could earn as much as £32,000 of free money by the time you turn 50.
Rajan Lakhani, head of money at Plum, the firm behind the research, emphasised: “There is a lot to know about personal finances, but a LISA isn’t something you want to ignore.”
He added: “It’s one of those things where the longer you leave it, the earlier you’ll probably wish you’d have got one.”
While acknowledging that setting up a Lifetime ISA requires some effort, he said: “It’s not exactly completely free money as you have to do a little bit of work to set it up, and it can only be put towards a first home or a pension, but it’s fair to say the rewards often outweigh the effort.”
The typical saver can currently manage to set aside just over £208 each month. However, throughout a standard year, many find themselves forced to dip into their nest egg to meet unforeseen expenses.
Furthermore, food costs emerged as the primary obstacle preventing people from boosting their savings, whilst 29% blamed their modest earnings.
Just over a quarter (26%) are battling with utility bill expenses, and 18% discover their cash disappears through internet purchases. More than one in 10 (11%) also confessed to feeling uncertain about their personal finance knowledge.
Meanwhile, 57% feel swamped by the vast array of savings products on offer, the OnePoll.com data revealed.
Rajan continued: “When you’re in your 20s, it can feel as though you have your whole life ahead of you to get on top of your savings.
“But anyone who’s in their 40s now will tell you, those years go pretty fast and you’ll wish you had started earlier. A little goes a long way, especially the earlier you start.
“Good saving habits in your 20s and 30s can have a huge impact on your quality of life when you get older.”
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