A fifth of young people in debt admit that their financial situation makes them feel depressed, a new report by Gocompare reveals.
The survey of 2,000 adults aged 18-25 and 2,000 adults of parents in that age range show that parents often underestimate their children’s total debt. The average amount owed by young people aged 18-25 is £3,109. The parents surveyed thought their children had an average of £1,659 of debt.
Of the young people surveyed, 48% currently have debts from sources other than student loans and mortgage debts. The most common forms of debt held are bank overdrafts (38%) and credit card bills (31%).
The reasons for taking on debt varied:
- borrowing from their parents (22%)
- personal loans (19%)
- payday loans (11%).
While 32% said they were managing their repayments, 40% said they wished they were not in debt.
The report also showed that many parents are worried about their children’s finances. 14% of the parents surveyed thought their children had “no idea” how to manage money, and 10% were worried about the amount of debt their children have. Matt Sanders, money spokesperson at Gocompare.com, said:
“If young people are prepared for the financial decisions they will have to make as adults they should be able to avoid putting themselves in a difficult situation in the future.
“It’s important that young people understand the basic differences between credit and debt, but also the application of ach in real-life situations. Likewise, a thorough understanding of budgeting, money saving and forward planning is all crucial to household money management.
“There are lots of ways that parents can help their children to understand and appreciate money from an early age, such as by involving them in the weekly food shop or setting them tasks to earn their pocket money and save for things they want.”
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