Financial challenges facing young adults and how to navigate them

For many young adults, financial freedom Never felt further away. Rents are rising, wages are lagging, and the dream is home ownership Slipping out of reach for an entire generation.

add to that student loanInsecure work and the ongoing cost-of-living crisis, and it’s no wonder that many twenty- and thirty-somethings are struggling to stay afloat.

“Young people today are facing a perfect storm of financial pressures,” says Ali Poulton, senior head coach at Octopus Money.

“In cities like London, I’m seeing customers on salaries below £25,000 paying upwards of £1,000 for the same room. This is completely unsustainable and forces many to rely on credit cards, overdrafts, or the bank of mum and dad.”

The list of financial challenges facing young adults is endless—but there are some practical ways to take back some control.

High rents and housing squeeze

For many, Rent Eats up most of their income. “Home ownership seems like an impossible dream,” says Ms Poulton. “Rising rents make it harder to make ends meet, and when you’re paying someone else’s mortgage every month, it can feel deeply unfair.”

Still, she stresses the importance of starting small.

“Even splitting the cost of one takeaway or one round of drinks at the pub per week helps savings Habit,” she says.

For buyers, ISAS can help. “A cash ISA provides tax-free growth if you may need access soon, or a stocks and shares ISA if your goal is further afield,” says Poulton.

“Both can be used within one lifelong jesus For first-time buyers, that means you will get a 25 percent top-up from the government. The key is consistency – small, regular amounts add up faster than most people realize. ,

Weighing Student Loans and Repayment

Loan repayment can feel like a constant drag, but Poulton says student loans “function more like a graduation tax than a traditional loan – most will never pay it off in full, and it’s usually written off after 25 to 40 years.”

If you’re torn between overpaying or saving, she recommends balancing.

“It may be worth paying the minimum amount each month and keeping any extra in a high-interest savings account or stocks and shares ISA,” she says. “This is because the savings interest can be higher than your student loan interest.”

She recommends using a student loan calculator to compare your take-home pay under different scenarios.

Insecure work and patchy income

The rise in gig work, zero-hour contracts and freelance jobs means many have irregular wages.

“When your income fluctuates, budgeting becomes non-negotiable,” says Poulton. “The first step is awareness: Check your banking app weekly, cancel unused subscriptions, and see where you can cut back without feeling deprived.”

She suggests focusing on what really makes you happy and setting aside a couple of “no-spend days” each month. “It’s not about restrictions,” she says.

“It’s about finding joy in things that don’t cost money — a park picnic, a free museum, or a movie night with friends.”

Rising costs and squeeze on savings

With food, energy and housing all the more expensive, Poulton says even small savings help.

“Share, swap, and save before buying something new,” she advises. “Ask around or try apps like Vinted, Olio or Very Good.

Discount plans can stretch even the smallest budgets. “Unid and Totem offer great student deals, and supermarket points can easily be converted into meals or cinema tickets,” she says.

For students, she adds a caution to avoid splashing out on loan land in the bank. She says: “Use a budgeting application like Monzo or Hyperledger to break it down into weekly pots so it lasts the whole term.”

Practical Steps to Gain Control

“Getting control of your money doesn’t have to mean big sacrifices,” says Poulton. “You can create small, stable systems that work for you.”

Start by tracking your spending so you know where your money is going, then Create an emergency fund To cover a few months’ expenses.

“Pay off high-interest debts first, and if your employer offers a pension, increase your contributions if you can – it’s one of the few ways to get ‘free money’ through tax relief,” says Ms Poulton.

Small steps toward saving can snowball.

“This year I’ve loved Monzo’s 1P Savings Challenge,” says Poulton. “This is a great example of how saving small, barely noticeable amounts every day can build up into a meaningful safety net, helping you feel less anxious and more in control.”

Even in the midst of difficult circumstances, small, consistent changes can make a big difference.

The cost-of-living crisis may not subside overnight, but building good financial habits now can make all the difference for years to come.

When investing, your capital is at risk and you may get back less than you invest. Past performance does not guarantee future results.