Research from the Money Advice Service shows most young people take full advantage of being able to instantly access credit at the age of 18 - without thinking about the consequences.
And just under three in ten admitted they regret some of the financial decisions taken when they first took out a credit card or loan. Three in five 26 to 29-year-olds said their biggest money mistakes were made when they were aged 18 to 22.
The desire to spend when the doors to credit opened resulted in 22% of the young people surveyed revealing they spent too much on credit cards, while 36% said they ‘used their overdraft as if it was their money’.
One in ten took out high-interest loans, turning to doorstep lenders or taking out payday loans. Some took advantage of the money to make big purchases - one in ten moved into a flat or house, while 7% bought a car they couldn’t afford.
Although four in ten turned to their parents for advice on how to tackle debt, one in five spoke with friends of their own age – even if they too lacked the experience to give useful guidance.
One in four said speaking to someone a little older, who’d been through a similar experience, could have helped them avoid making money mistakes.
Almost half of young people admitted their financial decisions left them feeling depressed, while more than one in four were left unable to afford everyday essentials, such as food and transport costs. A quarter of those surveyed said their financial mistakes damaged their relationship with friends and family.
Commenting on the research Kirsty Bowman-Vaughan, young people policy manager at the Money Advice Service, said: ‘It is so easy to get into financial difficulties when you are young and not aware of all the risks of credit. You suddenly see all these letters from banks offering you a big overdraft or a credit card and it can seem like you have hit the jackpot. But of course the reality is you don’t actually have any more cash at all – simply lots of ways to get into debt.
‘Most of us make mistakes soon after we turn eighteen and develop a ‘spend today, worry about it tomorrow’ attitude which isn’t sustainable. I would urge anyone in the early years of adulthood to get into the practice of living within their means. Any credit you take out now not only needs paying back, but paying back with interest, so you are losing out in the long run.’ Credit isn’t the only way to pay for goods when young. Setting a savings goal is a far better alternative, and more rewarding too. The Wishfund Savings Goal app was developed in co-operation with young people to offer a way to save and spend without getting into trouble. You can read the full Money Regrets report Here
"Article Reproduced from The Money Advice Service."