This year I became the scared-but-proud owner of an 18yr old (I know. Frankly I *am* too young, thanks for noticing).
Aside from the general astonishment that I grew this huge man-thing that looms around the house and inhales the contents of my cupboards at regular intervals in the middle of the night, this age change has brought about a not-unexpected-by-us-but-apparently-a-total-shock-to-him alteration in life view.
Because, y’see, all of a sudden he’s not able to unthinkingly rely on the Bank of Mum & Dad anymore. And over the last few months we’ve seen a dramatic increase in the desperate wails of “HOW MUCH?!”. From contact lenses (we bought the glasses, if he wants contacts, he funds them) to his phone contract (his phone works – not our fault he broke the camera longboarding with it in his pocket without a case on it – so if he wants na upgrade, he gets to pay, he’s suddenly finding out just how expensive life is.
And it causes genuine distress in the boy who’s working really hard to get a fledgling career off the ground, and getting very few figures on the inbound side of his bank statement.
So I was a bit sad, but not totally shocked, when I saw the new research from free credit checking service ClearScore; a third of 15-17 year olds plan to borrow, on average, £1,891 within a month of their 18th birthday. Jeepers. But what’s worse? A quarter admit they have given no thought as to how they will pay it back.
70% of them anticipate spend on credit or take out a loan before they turn 19. And a massive 94% plan to use credit to fund major purchases before they hit 20 – with intentions to splash out on an expensive item that’s beyond their means. Who the heck is teaching these kids about budgets and finance management??
My biggest worry from all this is that they’re coming of age in a world where they consider it totally normal – a vast majority ‘don’t worry’ about going into debt, seeing it as ‘a natural part of what people do when they become adults’.
Couple that with their woeful ignorance surrounding the technicalities and consequences of credit (The majority are woefully underprepared when it comes to the language associated with credit; only 8% knew what APR was, and only just over 10% even knew what a credit score was.
Oh, Credit Regret
I’ve written frequently about the hellhole spiral that is caused by unaffordable credit, and just how hard it is to clamber back out again. There is no way that this total lack of understanding in teens, and no doubt the lack of honest conversations at home about money is causing problems.
The research also showed that 18-24 year olds, further down the line in their financial lives, are struggling with the consequences of earlier credit related decisions. A third of this age group admitted getting into financial difficulty because they didn’t understand the terms of their loan or credit agreement.
Holy mackeroly, people.
Justin Basini, ClearScore CEO, commented, “The moment teenagers reach their 18th birthday they begin their financial life – whether they realise it or not. Today’s research highlights that we’re not doing enough to help teenagers navigate this difficult transition. It can be all too easy for young people, with limited exposure to credit, to fall into dangerous financial behaviour. Credit is an important and relevant part of managing finances, but it’s crucial to ensure young people understand how to use it in the right way. We need to make conversations about the ‘pennies and pounds’ as commonplace as those about the ‘birds and the bees.”