A report compiled by the Money Advice Service has found that 72% of the twentysomethings believe they made numerous mistakes when they embarked on financial independence, which they now regret.
The It’s Time to Talk: Young People and Money Regrets report, identified that many young people have a “spend today, worry tomorrow” attitude, which can result in some significant financial consequences.
Many 18-year-olds are often tempted by a string of financial opportunities, such as credit cards, store cards, personal loans and overdrafts, with many not having the financial maturity to deal with the debt.
The report found that many young people can pay the consequences of the debt for many years, with many being forced to drop out of university, take on multiple jobs or move back into the family home.
47% of people surveyed admitted that their money mistakes had left them feeling depressed, whilst 28% stated they often struggle to purchase everyday essentials.
27% admitted they had previously blown their budget on a holiday, whilst 11% said they had moved into a flat or house that was too big for their budget. 7% also stated that they had bought a car that beyond their financial means.
The government-backed research, which surveyed more than 1,000 UK people aged between 22 to 29, also found that one in ten people had taken out high-cost credit, such a payday loan, and 22% admitted they had spent a significant amount of money on their credit cards.
One story from the research shown how a young person can pay the price of a spontaneous financial decision for many years to come. As the Money Advice Service released a case of a person, whose name they have changed, called Patrick.
“Patrick was planning to go on holiday with his girlfriend, but when a better offer came up from a friend to go to Thailand, he jumped at the chance. He had an amazing holiday, said ‘yes’ to everything – scuba diving, beaches, partying – everything. Patrick avoided checking his bank account when he was on holiday as he didn’t want to put a dampener on the trip. When he came back from holiday and finally plucked up the courage to check his bank balance, he had spent all of his student loan, and gone £2,000 into his overdraft. Several years later, Patrick is still paying off the accumulated debt from that trip.”
The debt often leads to young people borrowing money from their loved ones, as 42% have stated they have borrowed from parents or friends, whilst one in nine people have been forced to move back into the family home.
Kirsty Bowman-Vaughan, the young people policy manage at the Money Advice Service, commented: “Most of us make mistakes soon after we turn 18 and develop a ‘spend today, worry about it tomorrow’ attitude which isn’t sustainable. I would urge anyone in their early years of adulthood to get into the practice of living within their means”.