Young people in Britain are facing mounting debts and unaffordable living expenses, new research from Neyber has found.
The study, carried out among 10,000 UK employees, found that an alarming 70 per cent of people under-34 need to regularly borrow either to pay their monthly bills or deal with day-to-day living expenses.
More worrying, young people are turning to more dangerous forms of lending just to get by. 33 per cent of 25-34 year olds are using credit cards for day-to-day borrowing – higher than any other age group.
The younger you are, the more likely you are to use a payday lender. 8 per cent of 18-24 year olds said they had used one, compared to 4 per cent of 25-44 year olds and 0 per cent of those who were over 65. One in 20 young people have resorted to a loan shark.
One of the reasons for this regular borrowing may be that more young people have jobs with fluctuating income. Sixty eight per cent of 18-24 year olds said their income changes each month. Over a quarter (27 per cent) said their income varies by more than 30 per cent.
The combination of regular borrowing and uncertain incomes has led to many young people feeling stressed. Sixteen per cent of 18-24 year olds said that their finances were out of control, while 20 per cent of 25-34 year olds said they were only just coping.
Even worse, there is evidence that debts are spiralling. The average unsecured debt among 25-44 year olds has risen to GBP £14,794.35 in 2018.
Neyber found that those in the GBP £20,000 – £29,999 earnings bracket – which includes those on an average salary – are spending an average of 37 per cent of their income on debt repayments, including mortgage or rent, per month. Excluding mortgages and rent, the average amount of unsecured debt employees pay each month is GBP £325.
Heidi Allan, head of employee wellbeing at Neyber said: “Financial worries can lead to sleeplessness, stress and even depression. Clearly our research demonstrates that young people in Britain are not coping and are having to borrow just to get by.
“More needs to be done to support people, whether that’s providing better financial education in schools, working with employers to offer their young staff financial education or even providing debt support and guidance.
“If we don’t act now, we will see young people in Britain spiralling into debt they’re unable to repay.”
Phil Andrew, CEO of StepChange added: “There are nine million people who have to use credit to pay for essential expenditure. This includes over one million people using high cost credit to make ends meet.
“When borrowing becomes a safety net for meeting basic needs the outcomes are often bad. Not financial wellbeing, but the corrosive hardship and harm of problem debt.”
“Employers have a strong interest in improving the financial wellbeing of employees and can be well placed to sell the benefits of seeking advice before problems get out of control.
“This timely report from Neyber gives a call to action to ensure working life is a source of support rather than worry for young people struggling with their finances.”
Source: PRinHR via ResponseSource.