Career starters face financial woes as 37% of young people struggle to pay off debt

Career starters face financial woes as 37% of young people struggle to pay off debt

Almost two in five (37%) 18–24-year-olds who are already in debt are struggling to pay it off, according to a two year-study by Fair4All Finance, the not for profit financial inclusion organisation.

The research lays bare how many young people are entering adult life via university, apprenticeships or entry level jobs with an existing debt burden, leaving them struggling to take control of their finances.

Over the last year, 29% of 18–24-year-olds say they have taken on more debt, and a worrying 22% say they have had an application for a loan or credit card rejected. 

As a result of being turned down, almost one in four (24%) said that they had had to cut back on essential spending, while 25% have also skipped meals due to the higher cost of living.

Young people at risk from overstretched savings and high-cost-credit habits

With 35% of 18-24s having used buy-now-pay-later at least once in the last six months, Fair4All Finance’s study suggests young people are at risk of building up high-cost-credit habits in order to get by, which holds them back financially from a young age.

While 31% have had to rely on savings to support their income in the past two years, one in three (30%) have no savings at all, leaving them at risk of not being able to cope with unexpected expenses. 

Almost one in three (32%) are already worried about covering housing costs, including rent, with many young people likely to enter the rental market for the first time as they go to university. Nearly half of young people (48%) in rented housing say their rent has increased in the last six months.

Overall, Fair4All Finance’s study has found nearly half (45%) of this age group are living in financially vulnerable circumstances. Causes of financial vulnerability range from ill health, low or unstable incomes or a lack of savings, to life events such as losing a job, bereavement or a relationship breakdown.

Credit unions can help close financial education gap

With rising rents, a lack of savings, and concerns about meeting basic living expenses, many students and young employees are at risk of financial instability that could negatively impact their learning experiences, at university or the workplace, and overall wellbeing. 

Fair4All Finance is encouraging young people who face debt problems or general money worries to seek out sources of free to access advice from their local Citizens Advice or speak to charities such as StepChange and National Debtline. Credit Unions can be a great source of support with managing your finances, including encouraging incremental saving habits and may be able to provide access to other financial support services.

Its findings highlight the urgent need for stronger financial education to help young people navigate these challenges and build financial resilience. Credit unions offer a valuable alternative to traditional banks, with a focus on providing tailored financial support to members including lower fees and fairer loan rates to help people take control of their money.

Diane Burridge, Interim Director of Development, Fair4All Finance comments:

“As young people embark on university, apprenticeships or the jobs market, they face a harsh induction to financial pressures from managing rising living costs to navigating the complexities of debt for the first time. 

“Through no fault of their own, a lack of financial education can leave many students and young professionals vulnerable and struggling to make informed decisions about their money. 

“The stark reality is that many students are heading to university this year worried about how they can afford their next meal and pay rent at the end of the month. For some, these money worries could make or break their studies and hold their careers back when they’ve barely started. 

“Credit unions can be a lifeline for young people navigating the challenges of budgeting, saving, and borrowing responsibly, by offering financial education and accessible services. Stronger financial education is not just about budgeting; it’s about giving young people the confidence to pursue their ambitions.”

link

Leave a Reply

Your email address will not be published. Required fields are marked *