How can young people make good financial decisions?

18 July, 2023Max Ejogo
Max Ejogo

Max Ejogo was highly commended in the 16-17 age group in this year’s Young Financial Journalist competition. His article explores the financial tactics young people can use to manage their finances more effectively.

With costs of living and inflation rates continually increasing worldwide due to a wide variety of economic factors, ranging from rising energy prices to cuts in pandemic relief and support, it has become apparent that young people have been stationed at the frontlines of this crisis, with much of the negative economic impact being absorbed by the 16 to 24-year-old demographic.

As a result, it is now arguably more important than ever for this generations to begin to implement methods of wealth management and financial discipline into their every-day lives in order to cement their financial futures by avoiding economic instability.

The impact of the cost-of-living crisis on people and the economy

In the United Kingdom alone, the annual rate of inflation reached a staggering 11.1% in October of 2022, a 41-year high, before easing in subsequent months.

This, coupled with some of the highest costs of living in Europe, towering rental costs for properties around the nation, high tuition fees and student debts for university, and increasing transportation costs, have all highlighted the importance of financial responsibility for the youth especially.

Why are young people struggling in particular?

Apart from the usual economic suspects, socio-economic components, like social media platforms, have also had a role to play in the issue of income disposability, these platforms often encouraging an increase in impulsive consumer spending on unaffordable luxury goods for example, younger people using these goods in an effort to increase their “social standing”, something I´ve witnesses firsthand in my social circle.

One of the reasons that can be attributed to the cost-of-living crisis has had such a drastic impact on the younger generations was a concept presented by the Royal Society of Arts which they named the “young person premium”.

They argued that, due to circumstances like the need to commute more frequently to work, and live nearer to their places of work (these often being in major cities in the UK), that expenses would increase as a result.

This idea was reflected in 2021 data provided by Demos, who found that “in particular, young people were paying more for their housing, bills and travel, among essential expenses. At £2,241 a month, young people are spending, on average, over double what their older (65+) counterparts spend.

What can be done?

Although the issue is worsening, there are a wide variety of methods and tactics that can be implemented by younger people in order to better manage their wealth, income, and expenditure in order to place them in a better position in the future.

These methods can be split into 3 primary categories:

  • monetary
  • social
  • political.


Firstly, there are a number of monetary changes that can be made by young adults in order to improve their financial security in both the short and long terms, one of the simplest being the incorporation of budgets.

By setting financial goals and then understanding the amount money that should be both spent and saved in order to reach them, young adults can become more financially responsible and avoid debt more easily by making informed decisions about their spending decisions.

This concept is crucial, as it is reported that, in the UK, a whopping 39% of adults (or 20.3 million) don’t feel confident in managing their money, with 11.5 million of them having less than £100 in savings.


From a social standpoint, investing in financial literacy is often regarded as the cornerstone of financial management, but this doesn’t necessarily need to be obtained through a BSc in finance.

Reading books from your local library, listening to financial podcasts, and watching informational YouTube videos from credible sources can all be great methods to learn various financial concepts and topics, from long-term compound interest investing to how credit can be used appropriately to your benefit.

In addition, understanding the impacts that social media, with the ease of accessibility to advertisements, product reviews, and influencers promoting certain brands, can create in pressuring young people to buy certain products or lifestyles.


Finally, engaging in government and policy in order to enact change can be another method used to better the financial situations of the youth more effectively.

In the UK, I would argue that financial systems often discriminate against young people by failing to recognise their unique needs, while also not enacting legislation that can ensure long-term assistance for young people, this having a detrimental effect on the younger generation in the future.

In order to prevent this, I would encourage young people to take action by voting on policies, like increasing student benefits for example, that would assist them in preparing for the future ahead.

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