The UK's 'foundation generation' (25-35 year olds) are outdoing their parents by being savvy with their money. They're trying to balance the daily spend with saving for the future, home owning and paying off debt, and up to half pay into a pension.
Holidays and hobbies come second, and 'keeping up with the Joneses' is a thing of the past.
Research from Aviva paints the picture of a financially aware generation. The insurer has dubbed Britain's 25-35-year-olds the 'foundation generation', because they are laying the groundwork for their financial future, are managing their debt and carefully budgeting their day to day spend. Unlike their parents, they can't count on a job for life and owning a home.
The typical monthly take-home income for this generation is £1,144, providing a steady income from which to manage their finances. Net income starts at £1,055 as people enter their mid to late twenties and rises to £1,246 as they hit their early thirties.
Money is being used wisely with 89% of the foundation generation holding a savings account, 38% having some form of workplace pension, 12% having a private personal pension, 41% investing in a cash ISA and 34% receiving protection from life insurance.
When asked about their preferences in the next five years for saving for retirement, over a quarter said they would prefer to save into a workplace pension, over a fifth into a private personal pension, and 18% through a savings option other than a pension, such as property. Asked how their employer could help them make the most of their finances, nearly a fifth said they wanted a range of benefits they could choose from.
While some of the foundation generation's current financial goals include saving for a holiday (8%) or funding their hobbies and interests (13%), far more people are looking to the future. Over a third (36%) are saving to buy a house, 34% are aiming to pay off their debts and 20% are looking to pay off their existing mortgage as quickly as possible. In addition, 22% are saving for the future generally.
They are acutely aware of the difficult economic environment. The majority (89%) have been financially affected by the current economic circumstances with 29% being more careful about what they spend, 13% saying they found it harder to make ends meet and one in ten worrying about their finances more than before.
The biggest single worry for this group was meeting an unexpected expense (23%) and making ends meet each month (19%). This far outstripped those people who are worried about keeping up with their friends financially (1%). Not surprisingly, with rising unemployment, 13% worry about losing their job and a prolonged period of being out of work.
The foundation generation demonstrate a resourcefulness in managing their money, as they look for best buys or deals (40%), watch what they spend (40%) and work towards their long-term financial goals (32%).
Aviva's Director of Workplace Savings Paul Goodwin said: "With so much concern about people not saving enough for their retirement, it's really good that this younger group of men and women seem to be actively managing their finances and planning for their future. This generation has the ability to make a real difference to their standard of living right up to and through retirement, if they put money aside now for the long-term.
"While there is a natural tendency to think that the younger generation will put off saving for retirement to fund their lifestyle now, this research shows that they do actively want to balance their spending with long-term saving. What we need to see is that this desire to save translates into more people actively putting money aside for the future as soon as they start their working lives.
"With automatic enrolment starting next year, every employee will have the opportunity to actively save for the long-term through a workplace scheme. Continuing to explain the range of benefits available in the workplace will ensure that employees don't opt out, and make the choice to put money aside for the future."