Global Money Week: Practical steps for building financial confidence

Taking the first steps toward financial independence can often feel daunting. However, building the knowledge and skills to make financial decisions ultimately builds financial resilience and wellbeing.

It’s more important than ever that young people are equipped with the tools to do this, particularly given the Current Account Switch Service’s research highlighting the lack of financial confidence amongst young people.

Just 25% of young people (18-27-year-olds) feel very confident in managing their finances, and only 21% consider themselves very financially literate – the lowest percentage of all generation groups surveyed.

Building the foundational skills needed to manage finances effectively often involves some simple changes that can have a meaningful impact.

John Dentry, Product Owner of the Current Account Switch Service at Pay.UK, shares his insights and practical tips on how young people can build better financial habits:

• Understanding different bank accounts: Just 26% of young adults (18-27-year-olds) are able to correctly calculate compound interest, and just 35% understand how a savings account works. Having the right account structures in place is a great first step to managing your finances, and a current account is the foundation of this. For many young people, a current account can serve a dual purpose and support with saving, with some bank account providers offering a pot system to allow users to separate money out for different uses.

• Setting yourself up for success: Less than a third of Gen Z (30%) feel confident in managing their money. Many bank accounts now offer tools and services to assist with budgeting, and in turn help young people build healthy money habits. Understanding what features best serve your needs are key, with a different bank account potentially offering flexibility people need to build confidence and financial resilience.

• Making the most of switching bank accounts: Many young people have the bank account that their parents or guardians set up for them. It may be that it still works for them, but it is important to consider looking for something new that aligns with their current priorities and goals. For those who want an easy, free and guaranteed process, The Current Account Switch Service supports switching to over 50 banks and building societies, with many having incentives and tools tailored for young people.

John says: “Learning to manage money is a key life lesson for young people, but often building a strong financial foundation can feel like a real challenge. We appreciate it is easy feel overwhelmed, but our advice is always to start small and make sure you’ve the right bank account in place.

“Reviewing your current account to ensure you have the tools, rewards, or savings features in place to meet your needs and goals is key. If you feel you need something different from your current account, it pays to consider switching.”