Do you find yourself living in your overdraft, mindlessly spending and feeling like your finances are completely out of control?
It’s likely that you do, as it has been revealed that 1 in 5 young people admit that their finances are completely out of control, according to financial wellbeing expert Neyber.
A staggering 70% of people under the age of 34 regularly borrow money in order to pay for their daily living expenses. Unsurprisingly, 61% said that their life would massively improve if they could manage their money better.
It also appears that the controversial payday lenders, who often charge extortionate interest rates, are used predominantly by young people, with 8% of 18-24-year olds having used one.
In 2013, Labour MP Stella Creasey was a driving force in capping how much these companies can charge, of which some would charge interest rates of 4,000% or more. It causes extremely toxic debt for young people, and in most circumstances, young people are using loans to pay off other pre-existing debts.
Furthermore, there are also ethical issues regarding these payday loan companies and their advertising tactics. Wonga infamously used adorable grandparent figures, Betty, Joyce and Earl, in their adverts to soften the blow of an APR rate of 4,214% (2013). The company attempted to appear friendly and cute, whilst financially haemorrhaging young people’s bank balances.
Head of Employee Wellbeing at Neyber, Heidi Allan, explains how circumstances such as job uncertainty, fluctuating wages due to zero-hour contracts, university loans and increasing rental costs are contributing to young people’s poor relationships with their spending. Allan suggest that employers should take more of an active role to help kick start a positive relationship with their finances.
Advice from the financial expert includes encouraging employees to build a budgeting habit, which emphasises the importance of living within your means and beginning to save, helping to put an individual in control of their finances.
Most young people start out with no credit score and are unable to gain approval for financial products. However, with help and advice from employers they can offer this access, providing support and better forms of finance.
Financial education is also stressed as currently schools fail to provide young people with financial advice. Instead, young students learn the majority of their money managing skills from friends and family. This is beneficial for those with parents who have a good financial wellbeing – but many people do not. Furthermore, the financial climate has changed and it’s extremely different from that of older generations.
The most important thing young people should be encouraged to do is to save, whether it be long term, short term, or safety net funds. This includes auto-enrolling for your pension and saving in general for your short-term goals. Another easy and great way to save is to have automate savings, so that once you get paid the money has instantly gone into a savings account or an ISA.
Technology is beneficial to us in all manners of ways, but it is very beneficial in terms of managing your money. There are really great banks that give you updates as soon as you’ve spent your money. You can also find apps that regularly update you on whether you’re on track to stay within your budget for the month, as well as options of rounding up your payments and saving or investing small amounts of money.
Lastly, the most important piece of advice was to get imaginative with your money. By starting to save, managing your debts better and developing good budgeting habits, this uncertainty surrounding money can be overcome. Although financial housekeeping should be promoted from a young age, having positive and helpful advice from employers could also be extremely beneficial.