A new study conducted by The Co-Operative Group has found that young people under the age of 35 are willing to risk getting into financial difficulty by borrowing substantial amounts of money over the Christmas period.
The study revealed that young U.K citizens feel under pressure to make sure they can afford gifts, decorations, food and other costly Christmas necessities. They also said they felt that they needed to resort to borrowing money to finance their yuletide activities.
This shows that although these people are aware that they cannot afford to overspend at Christmas, they are still willing to obtain credit so that they do not have to worry about budgeting in the December and January months. If young people are to use loans and credit cards to fund gifts and other expenses during the festive period, they could face a financial struggle for years to come if they fail to pay back the money they borrow.
The decision to finance Christmas with credit cards and store cards could be extremely dangerous for Brits’ financial circumstances. Many people who splurge over Christmas have a ‘buy-now-think-later’ attitude, as nobody wants to worry about money over the holidays. But failing to live within reasonable means can result in debtors needing to tighten their belts massively for years to come, just so they can clear the debt that was accrued previously.
The study revealed that 1/3 of under-35s believe they will not be able to cope with the Christmas expenses without borrowing money.
Added to this, The Co-Operative Electrical Group found that consumers between the ages of 24 and 35 are more than twice as likely to have been declined for a loan or overdraft, compared with their elder counterparts.
In addition to these figures, more than 50% of the young adults surveyed admitted that they are unaware of the Annual Percentage Rate charged on their borrowings. This level of ignorance can prove very harmful to individuals’ financial state if a large amount of money is borrowed, but terms and conditions are not properly understood.
Of these youngsters, when asked what they would do if they were declined for a loan or overdraft, 35% admitted that they would seek to obtain credit cards to fund their purchases as opposed to saving instead, and accepting that they could not afford to borrow.
This survey has uncovered interesting information about how young people view their finances and how little importance they place on saving and avoiding credit. The fact that most young people are unconcerned about the effect uninformed borrowing will have on their future solvency is shocking. Poor financial management can result in major difficulties and also spiraling debt which can seem impossible to escape.
If you feel that your debts are becoming out of control, a debt management plan could be the solution to your worries.
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Written by Katie Simpson