A new report suggests that young people are overly optimistic about their future finances, and believe they will earn high salaries, have low debt, and own cars and homes at an early age.

The NatWest survey of 8,500 people aged between 11 and 19 found that youngsters expect to be earning in excess of £31,000 a year by the time they are 25.

Overall, 59% of those questioned said they think they will own their own home by the time they are 25, and 71% believe they will own their own car by the age of 21.

Debt is less of a worry than might be expected, with 31% thinking they will never be in debt in the future, and 43% believing they will owe less than £10,000 by the time they finish university.

However, the current average annual earnings for 22-29 year olds in Great Britain are just £17,817, the average age of a first-time buyer is 28, and the average student owes £12,363 by the time they graduate.

The survey also reveals a lack of financial know-how on rates and loans with 76% unable to correctly identify the cheapest loan option from a list of four.

Stephen Moir, RBSG's Head of Community Investment, says the "HOPEFUL" generation (Home owning, Own car, Paid debts, Earning high, Flown nest, Unsavvy on rates, Low student debt) is in need of a reality check.

He said: "A 'HOPEFUL' generation of young people is not necessarily a bad thing, however a practical and realistic approach is crucial to equipping the next generation with the skills and knowledge they need to face the financial challenges ahead of them.

"Ultimately, the more exposed young people are to financial issues, and the younger they become aware of them, the more likely they are to become responsible, forward-planning adults who manage their finances confidently and effectively."

Young people in Cardiff expect to earn £38,126 at the age of 25 while those in Manchester predict average earnings of only £14,906.

Young people in Leicester are most optimistic about their future house purchasing power, with 66% believing they will own a house by the age of 25.

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