Click to Chat

Live chat with our customer service team.

InsureWithMax Blog


Young Debt

The pandemic has created havoc for people’s finances. Being over 18 means being able to drink alcohol in licensed premises. However, it also means being financially independent and running up possible debt. Many under 25s have money worries from building up debts. What are your tips for older children avoiding debt issues?

Debt

Young adults’ debt is still debt

A recent survey found that young people were much more likely to hold overdraft debts, catalogue debts and hire purchase agreements. Nearly three-quarters had a personal or unsecured loan, as young people are less likely to be homeowners and have access to secured credit.

Reasons for debt

Young people blame their debt problems on money mismanagement, low income, having children and losing hours at work. Young people were much more likely to attribute their debt to taking on a first home or tenancy.

 Tips for avoiding debt:

  • Budget and budget again, as it is the key to making sure borrowing doesn’t become a problem. A good budget should allow enough money to pay for costs and make debt repayments while leaving some money at the end of the month.
  • Only borrow when you need and have a clear plan to pay it back.
  • Choose your method of borrowing carefully, as it might be better to get a 0% credit card if you know you’re going to be able to pay the money back before the offer expires. Saves interest payments.
  • Make sure you know what you owe, as being financially responsible is keeping track of what you owe and when you have to pay it back.
  • Create an emergency fund by saving and use it in a crisis, rather than getting into the habit of relying more borrowing.
  • Set spending limits, as young people can over-spend on one specific life event, e.g. an exotic (expensive) holiday.

A mother told the BBC, that her son in his 20s had a job, but had difficulty managing money. He turned to payday loans after getting into financial difficulty over a bank overdraft. Her son got into £5,000 of debt by borrowing from five different payday lenders. She helped him find a way out and secure a proper loan at a decent interest rate. The best advice is to avoid debt if you have trouble managing money.

ChildMax pays your take home salary while you are on 12 months’ unpaid leave looking after a seriously sick child. Premiums start from £49.50 or an initial payment of £8.25 followed by 11 monthly payments of £3.75. Get a quote with 5 questions which takes less than one-minute.

Visit at www.insurewithmax.com  or call the UK call centre 0333 323 0098 for more information.

Sources:

https://www.cas.org.uk/system/files/publications/drowning-in-debt-young-people-and-debt.pdf

https://www.debtadvisorycentre.co.uk/blog/7-tips-to-avoid-debt-if-you're-young-0-5550-0

https://www.bbc.co.uk/news/uk-northern-ireland-17395947

 

Date: 01 March 2021 by max robinson