How to fix the finances of Gen Z

0:00Abigail: Decisions made in Washington can affect your portfolio every day. But what policy changes should investors be watching? Washington Wise is an original podcast from Charles Schwab that unpacks the stories making news in Washington right now and how they may affect your finances and portfolio. Listen at schwab.com slash Washington Wise.

0:21Claer Barrett: Outdated technology isn't going to improve a disconnected health care system.

0:25Abigail: Next.

0:25Claer Barrett: So what will? At Optum, we wake up every day and work for better. We call it healthy optimism. It's how we use insights and technology to help providers focus less on paperwork and more on patients. Will we fix it all overnight? No. But we'll wake up trying again and again until healthcare works as one for everyone. That's healthy optimism. Learn more at Optum.com.

0:50Abigail: Optum.

1:02Oliver Gardner: Hello, this is Claire Barrett from the Financial Times, and I am thrilled to bring you a bonus episode of Money Clinic on how to fix the finances of Gen Z, recorded with a fabulous panel at the FT Weekend Festival. I decided to dedicate my session to the 20-somethings in Britain because they are facing the toughest start to adult life than any generation in half a century. From the weak jobs market and stagnant salary growth to the unfair and broken student loan system, life is getting more expensive and key financial milestones like leaving home, buying a property, even starting a family are becoming harder to achieve.

1:39Oliver Gardner: But Gen Z are financially savvier than their older peers. You could argue this is through sheer necessity, but it's also through better financial education. And thanks to the generosity of FT readers, Flick, the FT's financial literacy and inclusion campaign, is now teaching teenagers financial life skills in over 1 ,000 UK schools, and they've supported the recording of this podcast. As usual, what you're about to hear are our opinions. Nothing we say is intended as financial tax or investment advice, but we do hope that it helps broaden the understanding of the unique financial challenges and opportunities Gen Z are facing.

2:18Now, let's get on with the show.

2:24Oliver Gardner: Welcome to the Money Clinic podcast, coming to you live from the FT Weekend Festival.

2:35Oliver Gardner: So the panel joining me today all come from the other side of the phone screen. They are expert financial content creators who have close to a million followers between them. So please give a big FT Money tent welcome to Abigail Foster, the former accountant turned financial educator and author. We have Michael Taylor, the trader and FT columnist better known as shifting shares.

3:06Oliver Gardner: We have Talani, an investment industry professional who shares her views online as Talani talks money.

3:17Oliver Gardner: We have Oliver Gardner, founder of the student loans campaign group, Rethink Repayments.

3:27Oliver Gardner: And last but not least, we have Brian Burns, Director of Personal Finance at Moneybox, who are sponsoring this session. Thank you, Brian.

3:38Oliver Gardner: OK, so let's dive straight into student loans, the biggest issue afflicting young people in this tent. Ollie, are you hopeful that our new Prime Minister, Andy Burnham, will do something about student loans at the budget on the 28th of October?

3:52Abigail: Yeah, I'm hopeful. We have Lucy Powell, an Education Secretary now, who back in February went on LBC and spoke about interest rates on student loans, particularly Plan 2 student loans, as being egregious. One of her sons has a Plan 2 student loans. And when she became Education Secretary, I was fully sort of embracing or expecting her to row back on those and say, oh, no, you know, there's nothing we can do about it. But she's stuck by those comments, which is amazing. And the student loan system has been called broken. It's been called unfair. And I think what we've seen is a real shift in communication style from this government where Rachel Reeves used to say that student loans were fair and proportionate, which everyone knew was just a blatant lie.

4:35Abigail: but now we've got a government who are at least acknowledging there's a problem and I think all of us would agree that actually as a generation who feels that we've been left out of policy discussions it's really important that the Burnham administration does make this their issue and shows that it is something that they are willing to move on. Everyone in the audience who has a student loan would say I'm making these really significant payments every month right 200 300 pounds and I still see my balance rising how is that alone like we can't pay it off it's almost impossible and I think that as a generation we are feeling really disenfranchised and that policy just isn't really working for us so I think it's something that you know is a real opportunity for Andy Burnham and his government and if they don't do anything on it quite frankly we'll try and rip their heads off I think but just as a as an example of how mental it is in 2024 I paid an 8 % interest rate on my student loan.

5:32Oliver Gardner: 8%.

5:32Abigail: 8%. And the changes that have been made to student loans since 2016 will end up costing us£22 ,000 more over our lifetimes versus the terms that we took them out. If a bank did that, if a bank changed the term of your mortgage, you would take them to court and you would win. But because we're young people and we're not necessarily a massive voting bloc, they think that they can just get away with it.

5:57Oliver Gardner: Okay, so Abby, I'm going to bring you in here. Now, what impact is this scandal, because frankly, it is a scandal, Olly, having on younger people's finances, but also their trust in the government?

6:07Claer Barrett: Well, their trust is completely damaged. And quite rightly, you know, we were expected to make huge financial decisions at 17 years old, you can't even get a credit card at 17. And we were just told, right, it'll be the same as a phone bill. Cool. Okay, it's really not. They don't trust the government to do anything right by them, because they've proven time and time again, that whilst they expected us at 17 to make huge life decisions, they've been able to retrospectively change that terms and those contracts. And, you know, and then when you see government after government basically say, sorry, it's just not prevalent, it's not important, all they're saying is you're not important.

6:40Oliver Gardner: Well, one angle that I focused on in the FT is that student loans are a tax on ambition that's affecting the economy, because graduate workers are holding back, they're trying to avoid crossing into these really punitive tax levels, where they might only be keeping 29 pence in the pound. Now, what are you all hearing from your followers? I mean, Talani, is this something that people are talking to you about?

7:04Claer Barrett: Lesser student loans being the tax and ambition, what tends to be the leading rhetoric when it comes to the tax and ambition is things like the 45 % tax rate, the 100k tax trap, where you have the 60 % marginal rate of tax once you cross the 100k threshold in earnings. I think student loans definitely... Because that can make those thresholds even worse. Exactly, exactly. So definitely that then compounds the issue. But what I do find tends to be more of a talking point when it comes to tax and ambition is the ones where there's no end in sight, right? So with a student loan, the more you earn, the more you pay.

7:37Claer Barrett: And obviously, the more you pay, the sooner you clear that debt, right? And then it's out the way. But with the marginal tax rate of 45 % and the 100-year tax trap, that doesn't go anywhere, right? the more you earn, literally, the more of your salary gets clawed into this higher tax funds. And that then tends to be viewed more, I would say, within the higher earning tax brackets as the tax on ambition versus student learning. Do you know if, so if, and Ollie and I have talked about this a lot on social media, if you're in the higher rate, so you're in that 60 % tax trap, and then you add on an undergrad and then a postgrad, which so many careers need now, you can be effectively paying 77 % tax.

8:14Claer Barrett: Could you imagine explaining to someone, oh, we asked you to do extra work, but you're only going to take home 23p on the pound. Why would you bother doing it? You just wouldn't. And then we go, why are the next generation ambitious to leave or to go into careers? Well, I was going to say, I'll go to different countries. But then we ask, why aren't the next generation bothered about their finances and growing their careers? And it's because of this. The government just aren't setting them up to succeed.

8:42Abigail: They are going to different countries. I think a year ago, people would tell me that they were going to go to Dubai. I think Dubai is now potentially less of an attractive option for obvious reasons. But the number of people that tell me they're going to Canada and the new big one, Poland. And they're like, why are you going to? And they're just because I will keep, you know, vastly more of the money that I earn to spend on what I want to spend it on. Sausages. Sausages, exactly. And vodka.

9:05Oliver Gardner: Vodka is a much better idea. Ollie, why aren't politicians realising it's not just the young vote that counts, it's everyone's vote.

9:13Abigail: I actually do think that so many parents care about it. When I speak to my own parents about it, I've got two older sisters who went to university as well and have plan to loans. I spoke to them about it and I was like, did you understand how bad these were? And they said, to be quite honest with you, it was the only way you could go to university. We couldn't send pay for you to go up front. And everyone else was doing it. All of our friends were sending their kids with these student loans. So we didn't really question it. And now they know about it. They're absolutely furious. And we hear a lot from parents on Facebook and Instagram who actually feel really guilty that their kids now have these massive student loans that have ballooned so much that they couldn't even pay them off with their lump sum from their pension.

9:52Abigail: And I do think that, yeah, there are lots of, you know, middle age and upwards people who are really angry about it as well.

9:58Oliver Gardner: Yeah. Now, Brian, I want to bring you in here. So what do you think this is stopping young people from doing? Now, at Moneybox, you've got insight into how people are behaving with their savings, with their investments, which they're building up for these milestones in life, which are becoming harder to achieve.

10:13Abigail: Yeah, absolutely. And I think the first thing I'll say is a statement of the absolute obvious, but we would be much better off financially as a country if the 9 % that people were paying back on student debt, if that was going into ISAs, house deposits, pensions. I think that's a pretty uncontroversial thing to say. The other point that I'll make is that by absolute pure luck, I do not have any student debt because I was born and grew up into financial education in Ireland, where we have free third level education. We absolutely have to have a conversation about repayment thresholds, RPI, CPI, all that sort of stuff.

10:43Abigail: But it does depress me slightly that we're not having the bigger conversation of how should third level education be funded in this country? Because the way that we do it, loading graduates up with£50 ,000 of debt, that's not normal across the world. there's very, very few countries that do it and we didn't do it before 2012 and we just don't seem to be having that conversation. We're having the conversation about, okay, if we change the parameters, will it save people£70 a year? But we really should be having that big conversation saying how should we be funding third level education?

11:12Claer Barrett: I would say, do you know what? Tony Blair has a lot to answer for. I'd love to chat to Tony Blair because... I'd love to be a witness. Yeah, because I get frustrated that basically it was his cabinet and his time era that was like everyone needs to go to university, it's really important that you go. The only reason he was advocating for that is because if you're in education, you're not unemployed. And then he did this big advocacy to be like, I reduced unemployment. I'm like, no, no, you just forced everyone into university. That's not fixing a problem. And now what we have is a ton of students are going to university, leaving university, and there is no employment out there.

11:43Claer Barrett: And then I see time and time again, older generation feeling, like you said, guilty that they should be paying off their kid's student loan. I'm like, no, that's not the point. Don't go in and fix the problem that the government should be fixing. The government have a lot to answer for all of this. It's not just the current government, it's previous as well.

12:02Abigail: I think it's important just to say a disclaimer to people in the tent and also the listeners of the podcast that I wouldn't want, whilst I'm not a financial advisor, I wouldn't want parents now rushing to think about paying off their kids' student loans necessarily. That might be the thing to do in a very small proportion of cases, but if you are going to do that, I would definitely recommend speaking to a trusted financial advisor and not doing it as a knee-jerk reaction.

12:26Oliver Gardner: Absolutely. And we need reform for everyone, not just for the privileged few to have their debts wiped out.

12:46Oliver Gardner: Well, look, we're going to move away from student loans now and talk about the things that Gen Z are good at. Now, one of the things, incredibly, that they are much better at than any other generation is starting investing at an earlier age. Now, there was a really interesting piece of research out, Michael, early this year by the World Economic Forum, which showed that Gen Z were starting investing in their 20s, whereas even millennials, Gen X, baby boomers, they were more likely to be in their 30s or 40s before they got going. I mean, why do you think that is?

13:19Abigail: So if you think of social media, we've essentially got three eras. So we've got the chronological era, which is where you log on and you see who posted what last. So it's your neighbor who said he's painted his fence. And it's amazing Meta made money on all of this because most people post boring stuff. But then it transitioned to the engagement era. So it would show people stuff that you engaged with. And now with TikTok, we've got the AI era. So Meta knows pretty much anything about you. So if you even show an interest in finance, you're going to get shown finance content, which if anything can be said good about Meta, it will be that.

14:01Abigail: But even the brands now have realized, you know, they're piling in, paying content creators, influencers. So there's a lot of money flowing into this sector because of the awareness and the eyeballs are growing. So that's pretty much why, you know, 10 years ago when I first started trading, I would talk about a tracker ETF and nobody had a clue what it was. It was like some mythical magic thing that you could track the market. But now pretty much everyone, I'd be very surprised if anyone in this tent hadn't heard of an ETF. But essentially that is why, because social media has driven it because of people's interests.

14:38Oliver Gardner: OK, so Talani, what would you add to this? People talk to you about money and about investing? Yeah, I would piggyback off what Mike said.

14:47Claer Barrett: I think some of it is a sign of the times as well, because you have a lot more young people investing out of necessity. A lot of the need to diversify the income streams because what they're getting from the nine to five simply isn't cutting it. So there's that aspect of things as well. So yes, there is a better flow of information, but there's also arguably a greater need because one income source just isn't doing enough. And so people want to sort of further the agenda in terms of building wealth without having to solely rely on just one job to do that.

15:16Oliver Gardner: And, I mean, are you worried, panel, that because of that impetus to do better with money, younger people are more likely to be drawn to riskier investments that could potentially produce a bigger return in the short term?

15:34Claer Barrett: Yeah, the Manosphere is, like, one of the key shows of that in the last few months. Hands up if you've watched the Manosphere. by Louis Theroux on Netflix.

15:41Oliver Gardner: Okay, that's pretty much the whole tent for those of you who are listening on the podcast.

15:44Claer Barrett: And obviously you all saw, what's the name, HS Tiki Soggy. See, I go into schools and teach in schools and it's actually a very real problem. Young boys specifically are being fed this narrative that that is the aspiration and that they see these content creators talk about how they made 100K months and they made, you know, a million pounds trading ETF or whatever in the last year. And obviously young people are hungry for success, which I applaud for them. But it means that they are really vulnerable to things like scams and people taking advantage of them. And I think that's where social media is a bit blurry, whether it has positive and negative uses, basically.

16:23Oliver Gardner: I mean, Michael, unusually, although you're a trader, that's what you do for a living, the frankly incredible educational content that you're putting out on your own social media channels, You know, you do talk about index funds and regular monthly investing and stuff that people might think, well, shouldn't a trader be talking about a hot tip on how to make a lot of money quickly? But it's not about that.

16:43Abigail: Well, some of the products that I buy are not available for the everyday person. And most people lose money trading. It's incredibly hard. I've been doing this 10 years now, staring at screens. During COVID, it was like 16 hours plus a day, pretty much. So, I mean, I love it. So it's very fun. But the average person with a job is probably not going to succeed unless you really love markets. Whereas if you just buy a global ETF or you diversify with some funds, maybe some funds that don't have heavy US concentration, you can actually build a diversified portfolio that will track the market and deliver inflation-beating returns, which really is what you want.

17:25Oliver Gardner: OK. A little quick disclaimer to say this is educational content, of course, on the FC Money podcast and not personalised investment advice. But saying that, Brian, I mean, people are coming to your platform to invest. You can start with as little as a pound with your investment products. I mean, you've specifically done that to appeal to a younger generation of investors. How are they responding?

17:49Abigail: Yeah, absolutely. So we've got 2 million people saving and investing on our platform now across all demographics and cohorts. But when we look at our younger investors specifically, Every single year, we see them, on average, starting to invest younger and younger, which is great. And then when we ask them about their confidence of various things, of saving, investing, pensions, home buying, they're getting more and more confident about investing, which is brilliant. The other thing that we see, which is kind of slightly counter to potentially some of the narrative, is that we believe at Moneybox, the way that most people should be investing has mostly been solved, right?

18:23Abigail: It should be simple, low-cost, diversified, long-term. And that's how we've built our investment funds that we have on the platform. We do have some individual equities. We don't have any crypto, anything like that. 85 % of new investors today choose those low-cost, simple, diversified funds, do their regular investing on a monthly or weekly basis. So yes, the crypto stuff is out there. Yes, the individual kind of trading stuff is out there. But the evidence that we see is most people taking very sensible, simple decisions to just regularly invest for the longer term, which is good.

18:54Oliver Gardner: And obviously, there's risk involved with investing. But even if you've only got small amounts of money, the younger that you start, the longer the investment horizon you have. If you can be confident that you can put that money aside, you don't need it in your emergency funds. Then, look, Michael, we talked earlier about how worried it is, how worrying it is at the moment to see what's happening in the bond market, whether that's going to translate into the stock market. But, I mean, as somebody who's been investing now for nearly 20 years, I suppose it gets easier the older you get to look through these periods of volatility and not just panic and want to sell up.

19:34Abigail: Yeah, I think if you think about Peter Lynch, so he ran the Magellan Fund. And at the time, I think it was one of, if not the best funds in the world. But actually, most of the people who invested in this fund lost money. And that's purely because they just didn't have the emotional resilience to stick with it. So even though they picked quite literally the best product on the market for about 13 years, 29 % Kagar, most of them still lost money. And that's purely because of their psychology.

20:04Oliver Gardner: Yeah, it's such an important thing to do.

20:20Oliver Gardner: well we're going to move on from talking about investing money to just simply talking about money that is another thing that I've noticed younger generations are much better at than oldies like me, breaking down taboos, sharing knowledge, and also sharing information about how much they earn. Now, just think to yourselves, people listening to the pod and in the Money Ten, how often do you ever tell anyone in your life how much money you earn? Now, think about telling millions of people on social media what your salary is and how you break it down month by month because Tulani that's why you're here that's why you're famous tell us more well I think money

21:08Claer Barrett: transparency is very important some of the topics we've talked about today I think speak to that I just thought there was a gap for financial literacy content that spoke to people in higher income brackets but a lot of the conversation around money online I felt like was rooted in financial struggle not so much about how to earn more what to do with money once you start earning more how to avoid the 100k tax trap what to do with pensions to avoid the 100k tax trap things of that nature but once I actually started posting I would say the reaction was I guess different to what I would have expected that's one way of putting it um you had there was the good and the bad I guess I can focus on both sides um there were some people I mean would you like to share

21:51Oliver Gardner: um your salary with us in the money tent today would that be okay I mean you've said it online

21:55Claer Barrett: Yes, five minutes online anyway. So I work in, my background is in investment banking and asset management. So for context, that's obviously one of the higher paying career paths that you have available to graduates. And at the time when I posted, I was a VP working in asset management. So that's a vice president. So that's typically six to seven years post university to get to VP level minimum. And I was earning a base pay of around£155 ,000 and then a bonus of around£100 ,000 on top of that.

22:24Oliver Gardner: So about a quarter of a million pounds, which some people, let's face it, were shocked by. They were impressed. But they also thought, how could somebody as young as you be earning the money? Some people just didn't believe you.

22:38Claer Barrett: Yes, there was a lot of that. I got a lot of comments around, well, it's not very British to talk about money. And anyone earning that kind of money just wouldn't post it online. And there is that. And that's precisely the reason why a lot of people are going into career paths blind, taking out£50 ,000 of debt, studying degrees at university without having the information to even make that calculation as to whether or not this is a good investment, because that's what your education is, right? It's an investment. Yes, there's other reasons why people should study certain degrees and go to university, but I think precisely no one would spend£50 ,000 on anything without doing the calculations and running the numbers as to whether or not this degree is going to pay for itself, right?

23:18Claer Barrett: Is it marginally or materially improving your earnings potential or not? And I think that's the part of the conversation that's missing. And sharing my numbers online and some of the rhetoric that I got in terms of feedback helps sort of highlight some of those discrepancies, I think.

23:35Oliver Gardner: Yeah, well, I mean, I think it's a really amazing thing that you've done. And frankly, it's done more to boost careers in asset management and searches for online, perhaps than anything else. Now, Abi, you're a big advocate for financial transparency as well, sharing information, helping each other. What's the kind of content that you're making that does that?

23:53Claer Barrett: For me, it's talking about the news and also talking about gender issues. Tell me more. Obviously, I actually think this is wonderful. Do you know why? Mainly because also you're a woman. And how important is it that as women, we're terrible at asking for pay rises and terrible for asking for a salary that we're worth. Everyone in this tent,

24:11Oliver Gardner: do you promise that you'll ask for a pay rise next week when you're going back to work?

24:16Claer Barrett: I know all your bosses are going to contact me being like, excuse you. But this is the thing, this is the reality. The only person it benefits for us not to be transparent about our income is our employers and the institutions. And I think we need to change that. And Gen Z know that. They are constantly pushing against it. And I would say it's so important that you talk about that because actually a young woman that's going in for a job that's probably maybe a VP in asset management then gets offered 110 goes, well, excuse me, Talani actually said she was on this. and then the job goes, oh, okay, yeah, fine.

24:46Oliver Gardner: Or it just gives you the confidence to push for more. To ask for more, 100%. Because I love reading the comments on your posts almost as much as I enjoy watching the content. But some of the things that are really heartbreaking are when women say, I didn't know that I could have asked for more at the job interview. And so many women are asking, well, and men are asking for more because they're reading it and thinking, aha.

25:08Claer Barrett: Yes, it's overwhelming women. The amount of women that message me and say, I didn't even realise I could ask, so I can negotiate my salary is alarming. But it is putting that conversation out there and it is making people question, you know, is there room to ask for more?

25:22Oliver Gardner: Talking of money conversations, according to lots of different surveys that have come out this year, one place where we are happy to talk about money is if we're talking to an AI-powered chatbot. Now, let's have a show of hands in the tent. Who here in the last year has talked to either Claude or ChatGPT or Gemini or any of the others, who's asked a financial question to AI? Let's have a show of hands. Okay, I would say that's easily two-thirds of the tent, skewing more towards the younger, although pretty much across the board. Panel, does this make you feel glad that people are asking somebody money questions or nervous?

26:04Oliver Gardner: Because as we know, anything with AI, it can hallucinate and it can get the answers wrong.

26:09Abigail: Michael. Yeah, I think it's good in a sense that people are taking an interest. But the problem is Claude can just make things up. So you have to absolutely fact check everything. Because otherwise, you might get led down the garden path. So it's good, but you've got to be careful, like most things, I guess.

26:29Claer Barrett: Your personal allowance. So you get, by the way, guys, you get£12 ,570 of personal allowance. So the income you can earn before you pay tax. I asked Chatty PT the other day, and it said, oh personal allowance is 12 000 pounds and i'm probably being like no it's not and then it replies in oh sorry you're right it's 12 570 and i was like what so yeah please fact check because

26:47Oliver Gardner: it's always it's always getting stuff wrong well i mean i speak to financial advisors mortgage brokers people who are giving advice and increasingly they're saying that clients are coming to them and they're saying well on chat gpt i asked it this and it told me why and sometimes that can be a really good way into a conversation and often they have to sort of put them right on a few things but I mean Brian do you think it's adding or subtracting?

27:13Abigail: I think we need more guardrails and we need more regulation but I think overwhelmingly I think it will be a positive over time. I think there's two reasons that 90 % of people put their hand up in the room here is one the lack of access to regulated financial advice in the UK only 8 % of people over really consistently over the last 15 years about 8 % of people get access to financial advice. I think the other one is the lack of judgment that comes from these AI chatbots. So I was a financial advisor for 10 years before joining Moneybox. A fairly regular refrain at the end of a meeting with somebody being like, oh, that wasn't as scary as I thought it was.

27:45Abigail: And I don't think that's down to me being scary. But it is people are very scared to have money conversations. And you can have these conversations with AI chatbots without the fear of being judged about stupid questions or anything like that. The problem is, as you say, there's no guardrails, you can get inconsistent answers, there's no regulation, and there's no consumer protection. So what we need to get to over the course of the next couple of years is regulated firms, hopefully like Moneybox in due course, giving people an avenue that they can ask these questions to where they get consistent answers, and they get consumer protection if anything goes wrong, because you don't have that with the chatbots today.

28:18Oliver Gardner: Yeah, absolutely.

28:29Oliver Gardner: We're going to come to you, audience. So if anybody really wants to ask a question, do stick your hands in the air. You're right there. I can see you. Ask your question.

28:38Claer Barrett: Well, firstly, thank you so much. It's been really, really interesting. So I just wanted to pick up, I think, Ollie, you said, I'm not necessarily telling you to pay back your student loans. I'm having a look. I owe£50 ,000. I've paid back£605 ,000 and my interest was 539, so I'm not doing very well. What is your advice if it isn't don't start making repayments? What actually would you suggest?

29:03Abigail: Okay, so let's say that you were to inherit£20 ,000. The problem with putting that all towards your student loan for the vast majority of people is that if that still means that after 30 years, your student loan is going to get wiped anyway, you will have paid back£20 ,000 more than you would have done had you not put that£20 ,000 towards your student loan.

29:24Oliver Gardner: You would be opting voluntarily to pay more tax.

29:27Abigail: Effectively. So that£20 ,000, you're probably more likely for the average person to put towards, say, a house deposit or investing it with Brian at Moneybox in an ETF. But unless you're a really high earner, you're not going to pay off your student loan anyway. So it just means that there'll be a slightly smaller balance at the end that's written off, and therefore you'll have just chucked that£20 ,000 into a black hole, and it would be much better to do something else.

29:52Claer Barrett: Can I say something as well? You said, I'm not like, so I haven't done a very good job. That's not true. And I think that is the narrative that I am absolutely, I get so frustrated with, with like the government and the news outlets that basically paint the narrative to you that you failed. You haven't failed. Just because you haven't been able to pay more than you've basically accrued in interest, that's a failure by the government, not by you. So please don't feel like you have failed because you haven't. Sorry, I get very upset by it. like young people that feel they failed. It's frustrating.

30:22Oliver Gardner: OK, we've got another question just here.

30:25Abigail: My question is on the LISA penalty. Would you recommend Gen Z buying, putting money into a LISA if they intend to buy in the South East?

30:34Oliver Gardner: OK, let me rephrase that question. The lifetime ISA. So this is the ISA for the under 40s that lets you save up to buy a property or use as a pension after the age 60 in retirement. So lots of controversy, Brian, at the moment. around the Lifetime ISA. Tell us why that is.

30:53Abigail: So Lifetime ISA was launched in 2017. As you say, you can put£4 ,000 in, the government will give you a 25 % bonus on top, so you can get£1 ,000 free from the government towards your first home or your retirement. It is, for most people, an absolutely brilliant product. It has helped 300 ,000 people get the keys to their first home already. Our modelling suggests it will help another million people over the next decade. It is not a perfect product. Abigail and I have had arguments about this on a stage like this before. There is a house price cap, which is what you're referencing there, which is£450 ,000.

31:25Abigail: That has not changed since 2017. You're not going to buy anything anywhere around here for£450 ,000.

31:31Oliver Gardner: Not even a shed?

31:32Abigail: No. And then there is also withdrawal penalty. So if you don't use your money to buy your first home or for retirement, you pay a 25 % penalty, which the way that that maths works out is you lose 6.25 % of your own funds. Those issues only impact a relatively small number of lifetime ISA savers. So the house price cap impacts about 2 % of ISA savers, the withdrawal penalty about 8%. Unfortunately, the government is utilising those to justify bringing in a new product, which by all the measures that we know is going to be significantly worse than the lifetime ISA. And we might hear more details about that in the budget.

32:06Abigail: We've got eight weeks before then, and I'm going to be pretty annoying with the government over the next kind of eight weeks. To answer your question, at the moment, if your plan is to buy over£450 ,000 in London and the southeast, I would not recommend using the lifetime ISA. But the one positive of all of the policy change is via consultation that they've put out on the new product, they have opened the door to that house price cap potentially changing in the future.

32:29Oliver Gardner: It's one of the things that's being considered.

32:30Abigail: One of the things that's being considered. So I would wait until after the budget on the 28th and hopefully we can get some movement on that.

32:36Oliver Gardner: And frankly, if you've got a pound that you can spare and you're under 40, it's well worth opening a lifetime ISA because once a product like that is opened, they're saying that they'll keep it to those who already have it. So if you want to invest a pound, then you've got that option in future. OK, well, thanks, audience, for your questions. Absolutely fantastic. Now, we're going to end this session and indeed the podcast with some positive hope. OK, well, we're hopeful that there might be some good news for Gen Z in the budget. But to give us all, panel, one tip or a quick financial fix for Gen Zs who are in the tent, listening online.

33:17Oliver Gardner: What would you say to them they can go away and do as a result of listening to this show that could make their finances a little bit more favourable in the future? We'll start with you, Abby. OK, two, sorry. OK, go on, two. One really small thing.

33:30Claer Barrett: Please read your payslip. Your pay-sip is your responsibility. If it's wrong, it's on you. And things are often wrong in it, so please check it. And secondly, talk about money with your friends and your family. It will help you and it will help them. Excellent.

33:42Oliver Gardner: Michael?

33:43Abigail: Yeah, I think the danger of things like this is you hear about compound investing and you think when you're young, you should start. And obviously, that's when you get the most benefits. But when you are young, you're probably not going to pay nine quid to stay in a Prague backpackers hotel. When you're old, you've got a mortgage, you've got kids. So I would say travel, enjoy it, think about that, because investing is good, but it's also not everything, so there needs to be a bit of a balance. So don't feel the pressure to be financially perfect,

34:13Oliver Gardner: to be on top of everything. I mean, my goodness, if I were in my 20s again now, I would spend so much more money in the pub.

34:24Claer Barrett: Now, Talani. I would say research heavily into the potential earnings prospects of whatever career choice that you choose before you opt to study whatever course that you decide or whatever university that you decide. I would say, yes, the system is broken, but we do have agency within it. So try to arm yourself with as much income earning potential as possible. Okay, Oli.

34:47Abigail: I think the single biggest thing, and no shade to anyone else here, I think probably the most important thing is to automate your savings. So basically set up a direct debit on the day that you've been paid or the day after you've been paid and you've worked out how much you want to save each month, how much you can afford, that money gets taken away. You don't spend that money. And if you invest that in a low-cost ETF tracker, in 10 years you'll look at it and you'll be astounded by how much it's grown.

35:11Oliver Gardner: Okay, very good. And Brian?

35:13Abigail: I think Talani's agency point is absolutely vital. Things are tough, but we see every day people hitting their financial goals with Moneybox. So last year we saw one first-time buyer every 10 minutes get the keys to their first home. Those are not all people who had help from Bank of Mum and Dad. These are people who have diligently saved over three, five, seven years and still hit their financial goals. So it's really important that people don't give up on what they're trying to achieve with their money.

35:36Oliver Gardner: OK, well, look, that's a really great selection of ideas, panel. I would just like to echo Abby's second point. Talk about money. How to talk about money. Bear that title in mind, because it might just be the second book written by Claire Barrett from the Financial Times.

35:54Oliver Gardner: which is why you haven't had as many columns from me in the money section over the last few months because Nathan Brooker the money editor has very kindly given me a bit of time off but it's all finished now and it will be and it will be out soon because I really think that talking more candidly about money with your friends with your family we're all feeling nervous worry and slightly Mr Bean-like inside when it comes to our finances at the moment and just breaking that silence and the shame around money just knowing that somebody else in the same position as you feels the same as you can just make you feel a whole lot better even if your financial situation in terms of the numbers hasn't changed so thank you very much to Abby Ollie, Talani, Michael and Brian you've been a fantastic panel thank you to Moneybox for being our stage sponsor and of course to FT Flick for making this podcast possible.

36:48Oliver Gardner: And finally, to our wonderful FT readers and podcast listeners, wherever you are, you were all here with us in spirit today in the money tent. So let's make some noise.

37:14Oliver Gardner: That's it for the Fixing the Finances of Gen Z edition of Money Clinic, and we hope you feel better armed to navigate yours or your children's financial futures. If you want to find out more about Flick, the FT's financial literacy charity, visit ftflick.com where we have a ton of learning resources for students and adults. Thanks again to Moneybox for sponsoring our panel at the FT Weekend Festival. And if you want to read an FT article I've written on this theme, there's a link in the show notes. And just to repeat my earlier disclaimer, the opinions expressed by our panelists are not intended as financial, tax or investment advice.

37:52Oliver Gardner: For that, you'll need to speak to an independent financial advisor who fully understands your individual circumstances. To get in touch with me, you can send an email to money at ft.com or follow me on Instagram and TikTok. I'm at Claire B. See you back here soon. Goodbye. This episode of Money Clinic was edited by Tamara Kamornik. Manuela Saragossa is the show's executive producer and Flo Phillips is the FT's global head of audio.

38:28Claer Barrett: Capital raising is being redefined in real time, from macro disruptions and shifting investor expectations to AI-driven demand and the rise of private credit. When headlines can tilt markets overnight, how can companies stay on course? Strategic Alternatives, the RBC Capital Markets podcast, explores how corporates and investors are navigating new pathways to raise capital, create value, and drive growth. When conditions change, alternatives matter. Listen to Strategic Alternatives, available wherever you get your podcasts. Outdated technology isn't going to improve a disconnected healthcare system.

39:05Abigail: Next.

39:06Claer Barrett: So what will? At Optum, we wake up every day and work for better. We call it healthy optimism. It's how we use insights and technology to help providers focus less on paperwork and more on patients. Will we fix it all overnight? No. But we'll wake up trying again and again until healthcare works as one for everyone. That's healthy optimism. Learn more at Optum.com.