A surprising survey carried out in the US by the Ohio State University reveals the laidback attitude of the younger generation towards debt. Not only do they not seem concerned about their mounting debt, they also seem to worry little about borrowing more money at even higher rates. This can only spell trouble for their future when their credit score is going to become very important to them.
Students and borrowing
Most students rely on student loans, leaving them with significant debt after their studies are finished. While many students go on to earn impressive incomes and have little trouble paying off their student debt, there are many more who aren’t as successful as their counterparts. Although there is a threshold of how much a student has to earn before the loan becomes repayable, and the repayments are relatively low once the student is earning the right amount, student debt still deters many people from going to university at all.
Credit being made available too early
In the UK, an eighteen year old is old enough to drink, vote and get married withoutparentalpermission, and is also old enough to apply for credit cards and loans. Many young people find this temptation hard to resist, and whilst they may initially plan to only use a credit card for emergencies, they are not alwaysdisciplined enough to do so. Very quickly, additional debt will mount, that, unlike a student loan, is repayable immediately. While trying to embark on an independent life away from home, it is very easy to fall into the cycle of debt, and this can easily get out of control.
Proper credit card information
Part of the responsibility for educating young people about debt and financial common sense lies with the parents, even if it seems like they won’t pay any attention to what they’re told. As a parent, your child is likely to get straight on the phone to you when the money runs out, so you’re doing yourself a favour by teaching them to take responsibility for their finances.
Receiving proper information about how to handle debt and how to use credit and credit cards wisely can help young people improve their lackadaisical attitude to debt. They should also be informed as to how tohelp themselves if they do get into financial trouble before it becomes too much of a problem. Having a debt management plan is a great way to get straight and organise finances – there are many companies who can help to organize someone’s finances, although some can be rather more helpful than others. Making sure problems are addressed before they adversely affect an individual’s credit score means that in the future, when the child is ready to buy a house, there will be no problems caused by past financial negligence.
