Top Financial Challenges for Young People Today
Financial Planning

Top Financial Challenges for Young People Today

Nick Charalambous
Nick Charalambous22nd Mar 2023 • 5 min read

In today’s world, young people are facing challenges in planning their financial futures. Many lack formal education in managing their finances and assume that it is something they’ll just understand one day. Young people in Ireland today need to start saving to be ready for the future. Here are the top four challenges that recent graduates or college students have in their path towards financial freedom.

Low Financial Literacy

Many young people think money and financial skills are something their parents or other adults just have. They don’t know that financial literacy is actually a skill that can be learned. Financial literacy is rarely taught in schools, so young people have to take the initiative. They have to learn how to budget, manage their credit or debt, and how to invest on their own.

There is so much information available, and it can be hard to know where to start. Low financial literacy can lead to stress and frustration when being financially independent for the first time. Luckily, even a few minutes a day is a great way to start learning personal finance management.

Managing Debt and Finances

Unfortunately, debt is an extremely common area of many young people’s lives. Whether that is student loans or consumer debt, it accumulates quickly and silently. Sudden life events and poor money management skills can exacerbate this along with the shift in society towards extensive consumerism.

Understanding credit policies comes with understanding finance and money, so a lack of the above tends to aggravate the other areas. However, this means an easy solution is building your financial literacy skills and implementing a budget.      

Managing student debt and finances with Alpha Wealth Financial Advisors

Increasing Prices and Cost of Living

In the last 50 years, costs have risen immensely and young people often feel the brunt of that change. Generally, those in their late 30s to 50s are in their financial prime. They have high-earning incomes and years of experience under their belt. This can be daunting as a university student or recent graduate with a lower income but understanding your money management and taking control of your income and spending is a great way to start.

This is why starting early is so important. Learning to invest and save at a young age will help set you up for a successful future. You can also be sure to maximize your earning potential by turning a hobby or skill into another income stream.

Financial Uncertainty

If the COVID-19 pandemic taught us anything, it’s that nothing is guaranteed. Life can change drastically from one day to the next with almost no warning. This is worsened by uncertainty surrounding environmental and other global issues. The constant innovations mean that industries are changing each day and causing career uncertainty.

This is causing a shift from saving towards spending. Although increased consumption is not necessarily bad, the past few years have taught us that it’s important to be prepared. This means saving for the future to be ready and able to feel financially stable in retirement.

In order to be able to save and set themselves up for financial success, young people have a seemingly impossible task. They have an overwhelming access to knowledge while simultaneously a lack of financial understanding. On top of this, there is growing debt and general uncertainty, and increasing costs. This is why starting early will set you off on a successful financial future and to overcoming these financial challenges.

How a Financial Advisor Can Help

Young people face a great deal of uncertainty in not only finances but also with living and career prospects. One way to overcome these stresses is to take control of your finances. Lowering unnecessary spending and increasing investments and savings will help to dissipate stress levels so you can enjoy life. We help our financial clients to view, manage and optimise their current spending and create effective financial plans so you can take control of your finances.

Get in touch and speak to our financial advisors today to learn how we can help you.

Our financial advisor helping clients in our Cork office

Nick Charalambous

Nick Charalambous

22nd Mar 2023

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8 Simple Expert Tips to Make 2025 Your Best Year Yet
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8 Simple Expert Tips to Make 2025 Your Best Year Yet

The start of a new year is the perfect opportunity to take control of your finances and build better money habits—but it can be hard to know where to start.

Financial success isn’t about being perfect—it’s about progress. Small, consistent efforts can create a strong foundation for long-term stability. Whether your goals are to save for a home, reduce debt, or feel more in control of your money, 2025 is your chance to start fresh. By reviewing your finances, setting realistic goals, and using tools like tax credits and savings plans, you’ll be well on your way to making 2025 your most financially secure year yet.

1. Review Your Finances Regularly

Think of your financial plan as a guide to staying in control of your money. Start by tracking all your income and expenses for one month—groceries, transport, bills, and even forgotten subscriptions. Once you know where your money is going, you’ll see opportunities to cut back, like eating out less or cancelling unused services.

To make this process easier, use Alpha Wealth’s handy Budget Calculator to get a clear picture of your financial situation.

2. Reduce Debt Strategically

Overspending during Christmas is common, especially on credit cards with high-interest rates. Prioritise paying off this debt as quickly as possible before you start saving. Reducing debt gives you more financial freedom and lowers the stress of repayment in 2025.

Pro Tip: Start by tackling the highest-interest debts first—these are costing you the most.

3. Segregate Your Savings

Divide your savings into three pots to keep your financial goals clear:

  • Short-term (less than 3 years): For immediate goals like buying a car or holiday expenses.
  • Medium-term (3-10 years): For goals like education or major life milestones.
  • Long-term (retirement): Invest in tax-efficient options like pensions to maximise growth.

By separating your funds, you can use the right financial tools for each timeline, ensuring your money works harder for you.

4. Maximise Your Savings Returns

Don’t let your money sit in low-interest accounts. For short-term savings, consider online banks like Raisin or Bunq, which often offer rates above 2%. Lock in fixed-term deposit rates now before they drop further in 2025.

Also, take a moment to review your mortgage rate. You might be able to switch to a lower rate and save significantly on your monthly repayments.

5. Boost Pension Contributions

It’s never too early or too late to focus on your pension. Small contributions now can grow significantly over time thanks to compound interest.

Take advantage of the tax relief on contributions—up to 40%. If your employer offers a matching scheme, join it to benefit from essentially free money. Boosting your pension now can make a big difference in your retirement years.

6. Practice the Rule of 72

Impulse purchases can derail your budget. Use the “Rule of 72”: wait 72 hours before making any non-essential purchase. This cooling-off period is particularly useful during January sales, helping you avoid unnecessary expenses while still enjoying genuine bargains.

7. Claim Your Tax Credits

The start of the year is the perfect time to review your tax credits and allowances. Many people are eligible to reclaim up to four years’ worth of missed credits, such as:

  • Remote Working Relief
  • Rent Tax Credit (€1,500 per individual)

Log in to Revenue’s myAccount or Revenue Online Service (ROS) to update your details and ensure you’re not leaving money on the table.

8. Plan Ahead for Big Expenses

Instead of scrambling for cash when big expenses arise, start saving early. Open a dedicated savings account in January for your 2025 goals, whether it’s a holiday, Christmas, or a major purchase.

For example, saving €167 per month will leave you with €2,000 by summer.

Let Us Help You

Ready to take the first step? Talk to us to learn more about how we can help you achieve your financial goals for 2025 and beyond!

READ MORE 15th Jan 2025
What Budget 2025 means for you
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What Budget 2025 means for you

As the dust settles on Budget 2025, many are wondering how the announced measures will impact their daily lives. With a headline figure of €6.9 billion in new spending, the coalition government is taking steps to address a range of societal needs. Here’s a breakdown of the key takeaways from the budget and how they might affect you.

1. Social Welfare Increases

Those receiving social protection will benefit from a €12 weekly increase in payments. Additionally, double payments in both October and December will provide extra help just when it’s needed most. Families with newborns can look forward to a special €420 ‘baby boost’ payment, while maternity, paternity, and parental benefits will rise by €15 a week. These changes offer real financial support for households facing the rising cost of living.

2. Tax Cuts and Reliefs

Taxpayers will feel some relief with the changes introduced in Budget 2025. The entry point for the higher 40% tax rate is moving up to €44,000, so more of your income will be taxed at the lower 20% rate. This will leave middle-income earners with an extra €100 per month. Combined with a 1% cut in the USC, these changes are designed to ease financial pressures and boost your take-home pay.

3. Housing and Renters

First-time buyers will be pleased to know that the Help-to-Buy scheme has been extended until 2029. This allows you to continue receiving up to €30,000 to help with buying your first home. For current homeowners, mortgage interest relief has been extended for another year, a lifeline for those feeling the pressure from rising interest rates. If you’re renting, there’s some welcome news. The renter’s tax credit will increase to €1,000 next year, offering significant relief for tenants battling high rents. Even better, you can backdate this for 2024, so if you’re a jointly-assessed couple, you could claim up to €2,000. That’s a big boost for your bank balance.

4. Students

Good news for third-level students and their families: college fees are being reduced by €1,000, bringing the annual cost down to €2,000. This will provide much-needed financial relief for those navigating the costs of higher education. Postgraduate students will also benefit, with the fee contribution grant increasing from €4,000 to €5,000. This change is a positive step toward making education more accessible and affordable.

5. Health and Wellbeing

Healthcare spending is a significant component of Budget 2025, with additional funds allocated to the Health Service Executive (HSE) to tackle waiting lists and expand services. There will also be further investment in mental health services, an area that has seen growing demand post-pandemic.

6. Vapers and Smokers

If you smoke or vape, you’ll see price hikes on these products. Cigarettes will increase by €1 per pack, bringing the most popular brand to €18.05. Vapers will also feel the pinch, with the price of a typical vape rising to €9.23 next year. These changes aim to promote health, but they will hit younger consumers’ pockets the hardest.

Conclusion

Budget 2025 introduces a range of financial supports designed to relieve the pressure on households as they navigate the cost of living challenges. While Budget 2025 brings positive changes that will help ease financial pressures, it’s important to take control of your finances and make the most of these opportunities. Consider speaking with an impartial financial advisor to get your money working harder.

READ MORE 2nd Oct 2024
6 Expert Tips for Parents to Secure Their Child’s Financial Future
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6 Expert Tips for Parents to Secure Their Child’s Financial Future

In light of back-to-school financial stress, here are six ways to help you better manage family finances and give your child the best financial start possible.

As a parent, securing your child’s future is always a top priority. However, with back-to-school season approaching and its associated costs, family finances are more pressing than ever. A new report* reveals that over one in four parents take on debt to cover these expenses. So, how can you manage family finances to give your child a strong start in life?

While saving the monthly €140 children’s allowance in a bank account is common practice, here Nick explores six more strategic options to help you better manage family finances and give your child the best financial start possible.

6 Tips to Manage Family Finances

1. Explore Alternative Savings Options

Instead of traditional low-interest bank accounts, consider savings plans from insurance companies with higher potential returns through diversified investments. With current inflation at 2.5%, seeking better returns is crucial to ensure better returns on your money.

2. Harness the Power of Compound Interest

Starting a savings plan early allows your money to grow exponentially. Compound interest is earned on both the initial amount and the accumulated interest. For example, saving €140 a month from birth can grow significantly over 18 years, with a 4% annual growth yielding €44,807.67 compared to €36,692.14 at a 2% growth rate.

3. Secure Funds for Education Early

Early savings prepare you for future financial demands and relieve the burden of education costs. A dedicated savings plan supports your child’s ambitions and causes you less financial stress by avoiding high-interest loans.

4. Utilise Tax-Free Contributions

Take advantage of the Small Gift Exemption, allowing parents and grandparents to gift up to €3,000 annually tax-free. This is a popular way to fund future college fees or house deposits.

5. Plan for Medium to Long-Term Goals

Savings plans are ideal for goals over five years, benefiting from compound interest. Understand plan terms to ensure 100% allocation of your money and avoid fees. Flexibility allows fund access without penalties, but remember it’s a medium—to long-term investment.

6. Consult a Financial Advisor for Tailored Investments

Speak to an impartial financial advisor about equity-based investments suited to your risk appetite. Investment options on a risk scale from one to five allow you to adjust over the years for growth within your risk profile. 

Book a financial review with Alpha Wealth for trusted financial advice on tax savings, pensions, investments, and more.

Learn more in our upcoming webinar

Our informative webinar, “How to Best Prepare for Your Children’s Education Costs,” hosted by David Looney, Senior Financial Advisor will provide practical strategies to help you manage and save effectively for future educational expenses. Learn how to ease the financial burden and ensure a secure educational path for your children. Register below:

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