Young Britons struggling with debt and budgeting

Young adults in the UK are facing significant financial struggles, with many battling debt and seeking help with budgeting, according to new figures released by Christians Against Poverty (CAP).

Research carried out by Opinium for CAP found that 35% of young adults are struggling with deficit budgets – spending more than they earn – a far higher number than the 9% of over-55s in the same situation. 13% of 18-24s say they have had to borrow just to afford food compared to 8% of 35-54 year-olds, 3% of 55+ and 2% of 65+.

These financial pressures and the easy availability of credit cards and Buy Now Pay Later schemes have led many young people into debt. Three in ten (30%) 18-34 year-olds report struggling to repay debt, compared to 23% of those aged 35-54 and just 7% of over-55s.

With borrowing increasingly normalised, younger generations are more reliant on credit for education, housing, and day-to-day expenses than previous generations. The rise of high-interest credit products and the growing number of households borrowing more and saving less are ringing alarm bells about the long-term financial vulnerability of many young people.

Over half (52%) of young adults – equating to more than 7.8 million people – say they need support with budgeting. CAP is warning that without better financial education and support, young Britons risk becoming trapped in a cycle of debt.

Cristian (aged 21) said: “I think budgeting should be taught at school. It’s very easy to get into debt, especially with Buy Now, Pay Later, which doesn’t look like debt. By the time many people realise their finances are out of control, it’s too late, and they are in debt, which can be very hard to get out of.”

As his family originated from Equatorial Guinea, he noticed a cultural difference in attitudes to finance, “African people think about tomorrow, not today, so they are very careful with money.” When he first moved to Birmingham, he was amazed to see Ferraris and Lamborghinis on the roads and was shocked to learn that most British cars are bought on finance.

Juliette Flach, Policy & Public Affairs Manager, CAP, warns: “Young people face a higher risk of being pulled into financial difficulty and spiralling debt. Not only are they in lower-paid jobs at the start of their careers, but they have not yet had time to build up financial savings and are less likely to receive family inheritances. Poverty and debt have an immediate impact, but they can also have a long-term impact as poverty can persist over someone’s lifetime.”

While measures to help safeguard pensioners, such as the ‘triple lock’ have gone some distance in reducing poverty for people who are pension age, there isn’t an equivalent for young people. CAP is calling on the Government to establish a protected minimum amount of social security, known as an Essentials Guarantee so that the basic rate of social security always covers life’s essentials and ensures support is never pulled below that level. In addition, CAP wants employers to ensure wages are sufficient to prevent any worker from facing a deficit budget. Without this, it’s unlikely that people will feel more hope for the future. According to the Office for National Statistics, the average rating of hope for the future was just 6.6 out of 10.