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Survey sheds light on the problem of debt for 18-to-24-year-olds.
It seems that debt has now become a major worry for many people aged between 18 and 24. A recent survey raises some concerns about how young people are coping with their debts and shows that some aren’t reaching out for help as soon as they should do.
What does the survey show?
The survey, produced for the Money Advice Trust, questioned 2,042 people aged 18 to 24. It found that on average, young people owe a significant amount. Over a third of people in this age group say that they owe almost £3,000, with the average being £2,989.
The most common forms of borrowing for people in this age group are credit cards, overdrafts and loans from family and friends.
Of course, not all borrowing becomes a debt problem. But it’s clear that paying back debt is something young people worry about frequently. Over half said that money was something they worried about on a regular basis and a third said they would describe their debts as a ‘heavy burden.’
Most young people do try manage their money responsibly with over two-thirds setting themselves a budget that they try and stick to. A similar number also check their account at least once a week to make sure they know exactly how much they’ve got.
Even though most young people try to manage their money well, it seems that dealing with debt still poses a significant challenge. Worryingly, well over a third said they didn’t have a plan to pay back the money they’ve borrowed and over two fifths said that managing their finances was more difficult in reality than they imagined. The root cause of this problem could be a lack of education surrounding money management and how to borrow sensibly.
What could this mean for the future?
If young people start to struggle to make their debt repayments – perhaps missing payments or making part payments – they will end up paying more than they need to as their lenders will continue to add interest and charges to what they owe. That’s not to mention the toll all that worry and stress may take on their mental and physical health.
For example, if payments are missed, the borrower runs the risk of getting defaults. A default means that the agreement is broken between the lender and borrower and this will have a negative effect on a young person’s credit history for six years.
This can be a significant worry for young people and can affect their chances of being approved for a mortgage or even getting a service that requires a credit check, such as a mobile phone contract.
Debt help is out there
According to the Chief Executive of the Trust, not enough young people are seeking help and advice when it comes to debt. It’s important to remember that some debt is completely normal and young people shouldn’t be overly worried just because they’ve borrowed some money. However, there is concern within the debt advice sector that if young people don’t know how to deal with their debts if they do become an issue, this could store up problems that could negatively impact the lives of these young borrowers.
If you are a young person in debt, or in any age group for that matter, there is help out there. There are various debt charities that can provide free and impartial debt advice – including National Debtline, which is run by Money Advice Trust.
Here at Debt Advisory Centre, our debt advisors are ready to speak to anyone who is struggling with debt. They understand all the different ways to tackle problem debt and can advise on the best way forward. It may be that you simply need to make some adjustments to your budget to afford your repayments. Or, you might need to start a more structured plan to repay your debts in a way that’s affordable for you, known as a debt solution. There are a range of solutions out there each one designed to help in different circumstances. Make sure you seek professional debt advice to find out which one is right for you.
by Christine WalshBack to blog home