By Catherine Ball
Under 25s are more careful with money than people in the 25-54 year old age group, according to new research that claims more than half of 18 to 24-year-olds would hang on to a cash windfall.
YouGov quizzed 2,037 people about what they would do if they were given £1,000 and could spend it however they wanted. The research, carried out on behalf of Callcredit Information Group, found six out of 10 young adults aged between 18 and 24 would choose to save the sum while only 12 per cent would spend it or give it to someone else.
Other keen savers were the over-55s with 55 per cent saying they would keep the cash for a rainy day. But just 36 per cent of 25 to 54-year-olds would keep hold of the money instead of spending it.
The survey found very few young people would use a windfall to reduce their debts. More than one in three 18 to 24-year-olds owe between £500 and £5,000 while almost one in five have debts of between £5,000 and £10,000, but less than one in four would actually use the £1,000 to pay back loans.
Among people over the age of 55, 79 per cent are in debt but just 21 per cent would choose to use the cash to reduce the amount of money they owe.
Over the last year and a half the amount people owe on credit cards and loans has remained pretty much the same, signalling that people are struggling to find the money needed to pay off their debts. The report claimed that most people's entire pay packet was going on basic living costs such as paying for groceries, covering utility bills and keeping up with the mortgage.
This lack of disposable income could be the reason why so many people would choose to hang on to a lump sum of cash rather than use it up immediately on paying off debts.
Graham Lund, managing director of Callcredit Information Group, said many people might be surprised to hear that so many younger people would choose to save money instead of spending it. But he said it would probably be wiser for a lot of them to use the money to pay off their debts and save themselves money on interest payments.
And he added that cutting the amount of money owed helped improve people's credit rating and showed they were a responsible borrower which might make it easier for them to secure loans in the future. He said having a good credit history was important for borrowers as it determined which deals they would be able to get for anything from getting a new mobile phone to taking out a mortgage to buy a home.