NEW YEAR, OLD DEBTS: 1 IN 5 ADULTS DROWNING IN DEBT

Over the past 12 months, searches around Brits searching for how to get out of debt has increased by 80%. In today’s Briton, 77% of people are stressed about money, while almost three-quarters have been so stressed they’ve felt overwhelmed and unable to cope.

Breaking the stigma around money, and starting the conversation, Fresh Student Living has created a guide on how young adults can better manage their money, to better prepare them for later in life.

Despite 81% of young adults saying they save money every month, one in five of UK adults say that they are drowning in debt with the following being contributing factors:

Personal Loans, Average amount £8,809

Credit Cards, Average Amount £7,542

Payday Loans, Average Amount £1,888

Overdrafts, Average Amount £1,483

Store Cards, Average Amount £1,275

For young adults who attend university and make use of student loans for both tuition and daily living (maintenance), the fear of debt is already something that many have to deal with. Regardless of this, there are still a few other factors that can see young adults racking up their debt:

Despite 93% of millennials stating they never want to have a credit card; credit cards can be a damning situation for those who can’t pay it back. Recent research notes that with minimum payments being made each month, the average credit card balance could take over 25 years to repay.

‘Buy now pay later’ services have grown in popularity with over one million Brits using the most popular ones daily; The most popular of these, Klarna has 60 million customers worldwide. These services are especially popular among those of a younger age who hold no other forms of credit. While these types of services make it much easier for people to buy more items, with the USP being the ability to pay at a later date, there is a chance to rack up an unaffordable debt.

Financing options help split the costs but can drag out the repayment period. Not only can financing eat away at monthly income, but most options usually have interest added on top, increasing the overall amount to be repaid.

Combatting debt and excessive spending

Research from Share To Buy reveals, as a nation, Brits make up to nine impulse buys a month on what we deem to be a ‘good deal’ spending almost £200 – amounting to 6,500 impulse buys over a lifetime totalling £144k.

Compulsive spending or shopping addiction affects around 8 million Brits during their lifetime, primarily observed in women in their late teens and early twenties.

Budgeting is one way to try and avoid overspending on impulsive purchases. Whether it’s with a spreadsheet or using an app/bot to help you divide your money across bills, savings and essentials, working out your monthly budget can help to visually see how much money you have to treat yourself each month.

Looking to cut down on debts, or just want to save more? Here are a few financial resolutions that can be implemented this year, and going forward:

• Always check if a website or brand offers cashback – Quidco and TopCashback are two of the platforms that allow you to obtain cashback for purchases you’d make otherwise. Cashback earned can then be withdrawn to PayPal, a bank account or as vouchers to other shops.
• Search for discounts where possible – double check websites for any deals or offers, whether a brand offers student discount or apps like Vouchercloud, who can highlight deals within your area.
• Use a separate account to help budget – Work out how much you can realistically live off, that doesn’t include your usual monthly bills and set up a standing order to transfer that amount to the account, leaving the rest of the money in your main account for bills and to save up.
• Take part in a money challenge – Whether it’s the 1p challenge, the £1 challenge, or something in between money challenges are a subconscious way to help those coins add up over the year.

The Fresh Student Living guide to how young adults can better manage their money, to better prepare them for later in life can be found here.