I was speaking to a group of sixth formers recently – bright, thoughtful, clearly capable. One question stayed with me: “What actually is a pension?” Not how to optimise it. Not where to invest. Just … what it is.
It would be easy to dismiss that as an outlier. It isn’t. It is a signal. Because for all the progress we have made in access to information, a quiet truth remains: most young people are entering adult life financially underprepared. And the cost of that gap is far greater than it first appears.
We tend to think of financial success as something built later – in our forties and fifties, once income has grown and responsibilities have settled. In reality, the foundations are laid much earlier.
The financial decisions made in our twenties – or the decisions deferred – have an outsized impact on long-term outcomes. Not because those decisions are especially complex but because they sit at the intersection of two powerful forces: habit and time. Time is particularly unforgiving.
A person who begins saving or investing in their early twenties benefits from decades of compounding. Someone who waits until their mid-thirties must contribute significantly more to reach the same outcome. The maths is well understood. What is less well understood is how easily that window is missed. Not through poor judgement, but through lack of awareness.
‘Intention-action gap’
There is a concept in behavioural economics known as the ‘intention-action gap’: the space between knowing what to do and actually doing it. In personal finance, that gap is often widest at the beginning of adulthood.
Young people are not short of intelligence or ambition. What they lack is early exposure to how money works in practice. Without that, even the best intentions struggle to translate into action. Financial knowledge behaves much like invested capital. The earlier it is acquired, the more powerful it becomes.
“A profession that limits itself to serving only those who already understand money inevitably constrains its own future.
Those who understand, early on, the value of starting, the role of discipline and the quiet impact of time tend to make small, consistent decisions that compound into meaningful outcomes.”
Those who understand, early on, the value of starting, the role of discipline and the quiet impact of time tend to make small, consistent decisions that compound into meaningful outcomes. Those who do not, often spend years catching up.
Financial literacy is frequently misunderstood. It does not require teaching teenagers to analyse company accounts or forecast market movements. The essentials are far simpler – and far more practical.
A young person should leave education with a clear grasp of a few core ideas: how compound growth works; why inflation erodes purchasing power; the difference between saving and investing; the purpose of a pension; and the basic principle of living within one’s means.
Our responsibility too
These are not difficult concepts – they are, however, inconsistently taught. The result is that many young adults encounter these ideas for the first time only after they have already begun earning, spending and, in some cases, borrowing. By then, habits are already forming.
The wealth management industry must also take some responsibility. For too long, financial advice has been positioned – implicitly or explicitly – as something reserved for those who already have wealth. The language we use can be opaque, the entry points unclear and the focus often skewed towards complexity over clarity.
That has consequences. It means that younger individuals, or those at the beginning of their financial journey, are less likely to engage. Yet these are precisely the people for whom early guidance would be most valuable.
Those who engage most effectively with long-term financial planning are not necessarily the most sophisticated or the highest earners. They are the ones who developed an understanding of money early.”
Encouragingly, this is beginning to change. There is greater emphasis on accessibility, more educational content, and a growing recognition that good financial habits start well before significant wealth is accumulated. But the pace of change remains modest relative to the scale of the opportunity – because a profession that limits itself to serving only those who already understand money inevitably constrains its own future.
Where change really happens
Financial Literacy Month – this month, and every April – is a useful prompt. But meaningful change is rarely driven by campaigns alone. It happens in conversations, around kitchen tables, between parents and children.
It is these small, often overlooked moments where attitudes to money are formed – explaining why starting early matters, why debt should be approached with care and why consistency often outweighs cleverness. These are simple messages but they are rarely delivered early enough.
Over time, a pattern emerges. Those who engage most effectively with long-term financial planning are not necessarily the most sophisticated or the highest earners. They are the ones who developed an understanding of money early – who saw it not as something abstract, but as something that could be shaped through consistent behaviour.
That early understanding creates confidence. Confidence drives action – and action, sustained over time, drives outcomes. It is a subtle advantage but it is one that compounds. And in finance, as in life, compounding is rarely dramatic in the moment. It is powerful precisely because it is not.
Scott Stevens is managing director – business development & marketing at Mattioli Woods
