How can we encourage young people to invest in their financial future? If you’re a client of Dentons Wealth, I imagine you already know how important it is to save money for a rainy day.

We’ve listed below a few ideas as to how the future generation of savers and investors can get into the savings habit.

Start with paying what you owe: understand the cost of debt

As such, you should pay attention firstly to clearing what you owe before you start saving or investing. By making overpayments, this should bring down the level of your debt and eliminate it more quickly. However, mortgages are designed over the longer term and shouldn`t come into this category.

Kick this off with modest savings amounts.

If you start your savings regime at a level that is too high, this can be self-defeating as it might affect too negatively on your living standards. Start modestly, maybe in the form of an ISA or a savings plan that is harder to access than a normal bank account. Being harder to access, there is less possibility that you will rashly dip into the funds you have built up.

Slowly increase the amounts you save.

If you are fortunate to enjoy a salary increase or bonus payment, consider saving or investing a proportion of it. We all feel we deserve some luxury when working hard but try not to spend it all on such items.

Ensure you invest on a tax efficient basis.

Personal Pensions and ISAs come with attractive tax advantages, therefore pay particular attention to making the most of your annual allowances. Some savings products that allow you to do so can be quite complex. If you feel you need help in this area, maybe because you don`t believe you are sufficiently knowledgeable to tackle this alone, the services of an Independent Financial Adviser (IFA) can assist you.

Ensure you make the most of the effect of compounding.

The rate of return, in the form of either interest or investment growth can compound over the period which you invest. This is where the return can start to earn a return itself. However, please be aware that the reverse is also true in that this compounding can also operate in the opposite direction. That is, interest builds on a debt and can increase the amount you owe quite quickly.

Ensure you never forget the workplace pension.

For those who are employees and satisfy particular requirements, such as age and earnings, employers have to automatically enrol you into a pension scheme. It is nearly always a good move to join this scheme as employers have to contribute as well. An important point to be aware of is that the money invested can normally only be accessed when you attain the minimum pension age, usually age 55.

As indicated above, there are a number of ways in which the next generation of savers and investors can be encouraged to pick up the savings habit. We hope that you can help the people you know to start to save money for that ‘rainy day’ or for their future ambitions.


Although every effort has been made to ensure that the information provided in this article is accurate and correct, the information provided does not constitute any form of financial advice. We recommend that you take financial advice before making any financial decisions.