Three fifths of UK adults think children need to be aware of debt before 18th birthday
Published: 6 March 2024
- Almost half of 18–24-year-olds are currently in debt, rising to 65% of 25–34-year olds.Almost half of 18–24-year-olds are currently in debt, rising to 65% of 25–34-year olds.
- This comes as 61% of Brits think children should be aware of debt before they turn 18.This comes as 61% of Brits think children should be aware of debt before they turn 18.
- A third say early awareness would prevent young people from getting into debt.A third say early awareness would prevent young people from getting into debt.
With almost half (48%) of 18–24-year-olds currently in debt, rising to 65% of 25–34-year-olds, new research from Tesco Bank shines a light on just how important it is that young people are aware of how to manage their money, for both their short and long term financial goals.
Young men aged 18-24 are likely to hold more debt than women of the same age, at £3,165 for men compared to £1,882 owed by women. Credit cards are the main form of borrowing among this younger age group (23%). And, compared to UK adults, it is the younger generations who are more likely to owe family members money (16%), be overdrawn (14%) and have used Buy Now Pay Later schemes (12%).
With this in mind, Tesco Bank’s research finds 95% of Brits believe it’s important that people learn about debt and understand how to manage their money from a young age, with most (61%) stating it’s best for young people to learn before they turn 18. The hope is that this will help create good money habits for the long term, with 60% seeing education as a way to help people make more informed decisions about current and future finances, as well as instilling good saving vs. spending habits (60%).
52% also think it will equip younger generations with more confidence when it comes to their finances, ensuring they know where to turn to if struggling with debt (39%), while also preventing them from getting into debt in the first place (31%).
Ban Mahsoub, Spend & Save Director at Tesco Bank commented:
“It’s not surprising that borrowing and debt are a reality for many people, including the younger generations. With this in mind, and particularly for those at the start of their financial journey through life, it's vital to know the difference between the various types of borrowing, what it should be used for and where it can help or hinder financial futures.
“If managed well, debt can help build a credit score and instil good money habits, but it requires careful management, especially if you borrow from a number of providers at the same time. It can be hard to keep track of what payments you need to meet, which is the most important, and by when. It’s especially important that younger people consider whether they have the most appropriate form of borrowing for their circumstances, including whether debt consolidation may help them manage this more effectively.
“If you’re in this situation or are worried about any debt you have, regardless of your age, and don’t know where to turn, speak to an independent debt charity who can help with free impartial advice.”
Ban’s tips on managing borrowing and clearing debt
Be savvy as a student
Students heading off to university are often handed a student account from their bank, and for many, this comes with an overdraft or a credit card. While this can help meet unexpected expenses, or give you extra protection when you make larger purchases, make sure you are clued up on what it means to be spending with a credit card or using an overdraft. Know what your interest payments are, when the bill is due, and make sure you meet your repayment dates.
Work out your budget before you borrow
If you are making a payment on a credit card, or taking out a personal loan for a set amount, look at how much you will be spending, and what the repayments will be. Then, work this into your budget. This will help you work out if you can afford to borrow the money, and factor in your repayments.
Go for the type of credit that suits your needs
Pick the right type of credit. A personal loan might be a great way to buy your first car, while you might want to book your flights for your summer holiday on a credit card. Once you have looked at this, check the interest rates available to you, how much you will reply in total and if there are any penalties for missed or late payments.
Build a positive credit score
A good financial profile relies on having built a good credit score. A credit card, when used responsibly, can help build a positive score and enhance your creditworthiness. Paying at least your minimum payment, on time, and not exceeding your credit limit are some ways to show a lender you are a responsible borrower. However, if misused, it can just as easily reduce your score, so be sure you’re using it wisely!
Make a list of any borrowing you have
If you’re borrowing money, it’s important to stay on top of how much you’ve borrowed in total and how much you have to repay. It's a key part of staying in control of your finances. Make a list of how much you owe, the APRs and your repayment dates.
Ask for help if you need it
There is no shame in asking for some help managing your money, and that includes any borrowing you have. A little bit of expert advice can go a long way and you can get free tools and support from independent charities like StepChange, Money Advice Service or Citizens Advice.
Consolidate your debts
Bringing together your debts into one loan could be a useful option if you have debts with several different lenders. A debt consolidation loan lets you pay off your existing debts, so you just have one monthly payment to manage.
Notes to editors
Research conducted by Opinium Research on behalf of Tesco Bank. Sample was 2,000 UK adults (aged 18+). Fieldwork was undertaken 31 October – 3 November 2023. All data has been weighted to be representative of the UK population.
Money and Pensions Service (MaPS): Financial education in schools