Rises in the cost of living are hampering young people from achieving their dreams of owning their first home, new research suggests.

In a study carried out by Sainsbury’s Finance, it was indicated that the majority of Britons between the ages of 25 and 34 have either reduced their level of savings or have stopped putting money into accounts for use in later life altogether. According to the financial services provider, more than a third (36 per cent) of people within this age group report that they are currently not in a position to save any money. Meanwhile, some 16 per cent of those surveyed were indicated as putting less cash away for the future than they were this time last year. The main reason for this, it was claimed, was due to recent surges in living costs. On the other hand, nine per cent of respondents were revealed to be saving more money.

Due to rises in living expenses, it may be possible that Britons discover that they are struggling to meet demands for payment on areas such as loans, credit and store cards, utility bills, mortgages and council tax. However, an inability to invest sufficient amounts of money into savings accounts might mean that consumers find that they come under additional financial pressure in years to come. Potential areas of payment difficulty could come in the form of meeting the cost of property repairs or making repayments on personal loans.

In addition, it was pointed out that a shortfall in savings for 25 to 34-year-olds could have an impact on the ability of many people within this age demographic to get on to the property ladder. At present the typical first-time buyer is 29 years of age, it was indicated.

Commenting on the figures, Neil Cameron, savings manager for Sainsbury’s Finance, said: “First-time buyers need to have a larger deposit than they did a year ago - in some cases as much as 25 per cent as many mortgage lenders continue to restrict their deals, so those looking to get on to the property ladder need to be saving more not less. Despite this, our research suggests that more people in the first-time buyer age group are now saving less.”

Mr Cameron went on to report that those consumers who are looking to put money away to go towards a deposit should take the time to ensure they select a product which “pays a consistently attractive rate” of interest. In addition, savers were advised to get a savings account which will not charge them for making a withdrawal.

For those consumers who are worried about their capacity to save money in the years to come, they might find taking out a loan is of assistance. In applying for a loan for the purposes of debt consolidation, borrowers may be able to find that they can meet the cost of numerous constraints weighing down on their spending quickly and effectively. And by having a single low-cost monthly repayment to make it is possible that more disposable income can be generated. Such money could then be invested into saving schemes. Selecting a loan for this purpose may be of particular assistance to those struggling to invest in a pension plan, as a recent Prudential study showed that the amount of cash being placed into such retirement vehicles has dropped by about half. Currently, non-retired customers are putting an average of 114 pounds and 57 pence into private pensions each month, a fall of about 134 pounds from figures recorded in 2007.

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