While young adults aged 25-to-34 are saving more than any other age group, they are also the most likely to report that their finances are negatively affecting their mental health.
This is according to The Exeter’s Consumer Health and Finance Tracker, which surveyed 2,000 UK consumers.
On average, 25-to-34-year-olds put aside £447 a month in savings – more than £2,500 more each year than people aged 45 and over. Despite this, one in five (21%) said they feel “substantially” less financially secure than they did a year ago, highlighting the toll this anxiety is taking on their health and working lives.
Financial strain taking toll on mental health
The tracker found that 24% of 25-to-34-year-olds say their mental health has been negatively affected by their personal finances in the past six months, compared to just 7% of over-55s and a national average of 15%. More than a quarter (27%) have taken extended time off work due to mental health or illness over the same period, the most of any age group and above the national average of 18%.
Within this age group close to one in five (17%) who accessed private care in the past six months, did so to access mental health support, the highest rate of any age group.
Young adults more likely to rely on savings
When they do take time off, young adults were found to be less likely to be supported by Statutory Sick Pay (SSP) than older groups. Almost three in 10 (29%) relied on their own savings as their primary source of income during that period, while just 13% were supported by SSP. In contrast, 31% of over-55s depended on SSP when they took extended time off.
Middle-aged reporting lower levels of financial anxiety
While financial anxiety is high among younger adults, older groups appeared to be less affected despite saving less. A quarter (26%) of adults aged 45-to-54 save nothing each month, yet this group is less likely to report that their finances are affecting their mental health (14%) or to have taken extended time off work (15%).
Among younger adults, financial concern is evident in health consequences and absences from work in a way that older adults, despite saving considerably less, are not reporting to the same degree.
Easing anxiety
Jack Southcott, head of protection proposition at The Exeter, (pictured) said: “The data presents a picture of a generation that is actively saving but is also carrying a level of financial anxiety that’s showing up in their health and their time at work. Saving more is not providing the security this age group is looking for and, when that concern starts to affect mental health, the financial consequences can quickly stack up.
“It is encouraging to see that younger generations are thinking more on their long-term finances, but we need to ensure they are supported in a way that can ease anxiety and not add to it.
“Advisers have a real opportunity to engage with younger workers to address these concerns. If the sector were to continue to focus on the traditional audiences, we risk missing a whole generation whose needs look very different but are just as important.”
