Ten years ago, we watched in amazement as employees of Lehman Brothers scurried from the gleaming building, heads down and cardboard boxes in hands. Facing a staggering $619 billion debt, this financial institution had filed for bankruptcy following the US sub-prime mortgage crisis.
Little did we imagine that in 2018 we would still be feeling the tremors of the ensuing tsunami of failing banks and government bailouts here in the UK.
Dubbed ‘generation debt’, 25 to 34-year-old millennials face long-term but ever-increasing rent, prohibitive house prices, university tuition fees and maintenance grant debts and lower salaries than 10 years ago.
At the time of the financial crisis in 2008, the average wage was £24,100 in the UK. In 2017, it was £23,300, according to The Institute for Fiscal Studies. Unlike older generations, today’s young people also have to contend with less job security; internship after internship and that new exciting job turning out to be a fixed term contract with no benefits.
The total amount of rent paid by tenants in the UK soared to more than £50bn in 2017, more than double the level of a decade ago. Despite rental hikes, the number of people renting has doubled over the last 20 years: 65% of 16-24 year olds and 42% of 25 to 34-year-olds now rent privately.
While wages have reduced and living costs have increased, house prices add to the grim picture. An ‘average’ home cost £150,000 in 2008; it’s now £220,000 in 2018, even with Brexit wobbles. And as anyone who lives in London (or other prime areas) knows, a quarter of a million pounds will buy you enough room to get out of bed and into the sink.
Emily Beaumont, 22, a history student at Sheffield University, looks back in anger at her parents’ lifestyle in their 20s, compared to her own. “We realised recently that my maintenance loan of £3,250 a year is exactly the same amount they got. But theirs were free grants. I’ll have to pay mine back with nearly £28,000 of tuition fees too. Their rent was £35 a week in London and mine is £120.
“My parents put an extra £100 a month into my account, but I still have to work every holiday as a barista – alongside people who’ve all graduated, which does make me question the point of a degree. I buy all my clothes from Depop (a peer-to-peer social shopping app) or charity shops and I shop for food at Aldi.”
Nile Carter, 26, works in digital marketing in London. His take home pay is £1,400 a month (after student debt has been deducted) and his rent is £830 every month in a house shared with three friends. “It infuriates me when I see my age group described as entitled, lazy snowflakes by generations who have never experienced the sort of life I have.
“From where I’m sitting we’re optimistic, can-do and quick to learn. I spend my money on going out and gigs and I aim to go to at least one festival a year and one beach holiday with my mates. I work hard and I want to enjoy what little I have.”
Georgia Phillips, 32, is mum to seven-month-old Josh. She and her husband Greg, 35, have decided to move from London to York as the only way to get a foot on the housing ladder. “It’s bitter-sweet because we’ve had 10 years of enjoying everything London has to offer but it’s just not feasible anymore with childcare on top of our rent for a one-bedroom flat. We’re working to stay still and I want to try and be a bit more relaxed.
“We’re the first of our friends to have children. My mum had her first child at 24 but that straight line of university, work, marriage, house, child, family just isn’t valid today. We’re all about the curve now.”
What is one of the best lessons we learnt from 2008?
In short, the need to protect your money - no matter how little or how much you have at any one time.
In 2008, the Financial Services Compensation Scheme (FSCS) protected £50,000 of money lost in banks during the crisis – now that figure is £85,000 (and £170,000 for joint accounts).
Learn to recognise the FSCS logo. FSCS protection now covers a huge range of financial products, so do make sure to check that anything you take out, whether savings, investments, insurance, pensions or home finance, is FSCS protected.
Know your limits too. Each product type has different compensation limits and you can check that on the FSCS website . If the worst were to happen, you should feel confident that your money is safe as long as it is protected by FSCS.
Any bank, building society or credit union savings are automatically compensated without you needing to do a thing, within seven days. Other product areas, you will have to make an online claim and if you do that claim directly through FSCS, there is no commission or charges. There’s also live chat and a helpline available if you need it.