THE COST OF LIVING & BEING YOUNG

MONEY MANAGEMENT WHEN EVERYTHING IS EXPENSIVE

Low financial resilience is a real issue for young generations today, as ‘cost of living’ tops the list of concerns of Millennials and Gen Z. Forty percent of young Americans (18-25) are feeling the effect of surging rents making it even harder to afford day-to-day necessities. It’s a case of figuring out how to afford to live right now. Deloitte recently found that ​​half of this cohort are spending all of their monthly income on living costs, while 2 in 5 have taken on a side hustle to keep up. In the US up to 75% of Gen Zers are considering new ways to earn more money to make ends meet. Other UK research by Demos found that people aged 18 to 30 are more likely to be savers than any other age group yet are still the most affected by the cost of living crisis. Nearly half (47%) reported that they have too much debt or little capacity to pay bills in the event of a financial shock, despite often doing the right thing with their money and spending it on essentials:

"Despite the criticism that young people often face, regularly accused of spending too much money on coffees and avocados and not being financially prudent, our new research shows just how much young people are trying to look after their finances and save for the future - more so than any other age group." Ben Glover, lead author, 'Bouncing Back' report.

The struggle to make ends meets while also not being able to afford the basics like a home that previous generations managed is increasingly playing out in politics. In Europe, Aidan Regan reports that the landscape of Irish politics is shifting due to a new working class of highly educated, low-income voters: “They are not poor, but they feel broke. In OECD classification, they are lower-middle income. In the past, this meant home ownership. Not today.” From France to Sweden to Italy, the rise of the far right is underpinned by a largely disenfranchised youth who don’t see their governments working to support them.

WORRYING ABOUT THE FUTURE

Naturally, financial strain and worry has implications on living standards. In the past, we’ve seen wage-adjusted inflation to meet rising costs, but in 2022, there is below-inflation pay growth reported across multiple industries. For young people, the tension in planning for a future at the start of your adult life versus scraping by in the ‘now’ is enormous. The majority (61%) of young people in the US say they lack confidence about being able to afford their dream future.

“It’s pretty depressing because I’m just kind of starting my life. I feel a bit taken aback…I feel like my friends and family are all in a similar situation. This world is not sustainable.” - Luke, 26, UK

WHAT TO DO NOW?

Everyone will be forced to make difficult decisions, with 40% of households in the UK expected to experience fuel poverty this winter and nearly half of Irish households, meaning choosing between food or heat for families. This has sparked action, with young activists organising to demand support and create change (for example, the recent Inflation Reduction Act in the US was brought into legislation by President Biden in response to pressure from young activists).

“We didn’t cause this problem, but we don’t want to live in the fallout of it, we want to reverse it so that our children and our children’s children can have a greater future.” - Lauren Maunus, 24, Advocacy Director of Sunrise Movement.

As we saw with the pandemic, when a crisis hits it is action that speaks louder than words. For businesses, especially those whose customer base are those hit harder by financial crisies, such as young LGBTQI+ and BIPOC communities, it’s important to find ways to minimise the costs they are experiencing to keep it possible for customers to afford to come. The owner of iconic Dalston Superstore Matt Tucker, is reluctant to increase prices to make sure their space is still accessible for their community: “We're very aware that everyone's feeling pressure. It's really going to start hitting people in the run-up to Christmas, especially our younger ones who maybe don't have so much money. We're conscious of keeping things as affordable as we can for them.”

BRAND TAKEOUTS

Meet Empathy With Action - Brand communications over the coming months may be met with increasingly frustrated audiences as they adapt to manage their finances over the winter months. Being able to empathise with these challenges needs to be complimented with action - whether that’s via reassuring a commitment to things/prices staying the same, or alleviating concerns in some way. If there are changes, it’s important to explain why.

“2022 is a year of crisis conglomeration - from the energy crisis to the housing crisis, the cost of living crisis to the climate crisis - all of which are interlinked, and all of which need transformational solutions. Despite the challenges we are collectively up against, the solution to one crisis could indeed solve another crisis. The opportunity exists for all businesses to re-think their status quo and move into business models that deliver for multiple stakeholders - from employees to customers, from communities to the planet - not just shareholders. I’m optimistic that we will see innovation across supply chains, business sectors, industries and nations. Key to success will be bringing young people on this journey.” Claire Hyland, Head of The Youth Lab, THINKHOUSE

Continue Offering Something Of Value - As we progress into a period of potential recession, people feeling the effects of high prices will question value more and more. In general, shoppers do not want to have to compromise when it comes to quality and often still seek ‘something special’, justifying its worth. As a brand, are you communicating your value proposition strong enough? It’s not about cutting prices or being the cheapest - it’s about being a brand people can rely on as their consistent go-to.

Don’t Lose Sight of The Long Term - A common conversation during economic recession and hardship is about reducing marketing spend, yet we know from research that brands that continue to build and maintain relevance during these times benefit from doing so. Alexander L. Biel and Stephen King revealed in their study that “those that cut their advertising expenditures in a recession lose no less in terms of profitability than those who actually increase spending by an average of 10%. ​Cutting advertising spend to increase short-term profits doesn’t seem to work.” Stay on your audience's radar in relevant and helpful ways where you can - actions that pay it forward to people and planet during times of uncertainty and hardship are remembered and repaid.