In the financial situation in which we currently find ourselves, with galloping inflation that is eating into the purchasing power of the consumer, young people are not going to get off lightly. Rising rents and house prices will go beyond average household incomes with the future of young people, in terms of renting or purchasing a home, looking bleak.
The consequences of the coronavirus have created a breeding ground for lower salaries, high short-term employment, late access to the labor market, difficulties in buying a home and an apparent lack of financial education, all of which reduce interest in saving, investment and long-term planning. Not an ideal situation for young employees taking on their first jobs.
Within the whole of society, people in the 20-30 age group are the most vulnerable to the repercussions of economic stagnation, since they are the first to feel the effects of the crisis.
In a context of high inflation, young people can be particularly affected for many reasons: high rates of temporary employment and unemployment, low salaries and instability, difficulties in becoming independent all take their toll. This cocktail of factors explains why young people will undoubtedly suffer the challenge of making ends meet in the near future.
When we talk about the temporary rate, we refer to the fraction between the number of employees with a temporary contract and the total number of employees. For this reason, a higher rate of temporary employment and unemployment leaves young people in the first line when inflation hits because it implies less spending power with which to face the higher cost of living and the nauseating uncertainty when short-temporary contracts come to an end.
In cycles where the economy is hit by a negative shock, the first thing to happen is the destruction of temporary jobs, and in relation to what was mentioned in the previous paragraph, this places young people among the most affected groups.
After the increase in potential consumer spending during the summer months, expressed at the beginning of June, it seems that new inflation data caused the «paralysis» of «some» of the purchases planned for the next six months by 75% of Spaniards.
Bad management of personal finances is like a small leak in a ship, it becomes the reason its sinking. For this reason, it is important to know the fundamental principalmente of personal finance so that teens and those moving into the working world know how to budget, especially, when prices rise.
But what can young people do to deal with inflation? Here are some ideas to consider:
- Budgeting is the first thing they should think about. Having an understanding that planning a budget and sticking to it is important. This can allow a person to enjoy their money in the best possible way, while leaving room for saving for the future.
- The next thing is tracking spending. Young people can do a lot to avoid unnecessary expenses and there are some that without realizing it can make a dent in our pockets. These are unnecessary expenses that, if not well controlled, considerably reduce our current account. We have to analyze what essential expenses we have and which ones are expendable and avoid whims, or ‘treating ourselves’ too often in these inflationary times.
- Setting long-term financial goals and objectives makes a person more focused on meeting those aims and thus more likely to follow a predetermined budget.
- So for young people it’s time to be aware of the fine line between ‘needing’ and just plain ‘wanting’ and knowing how to differentiate these is an important lesson to take on board.
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