Debt is not an older person’s problem. 18-to-24-year olds are building up considerable debts, despite trying to budget properly.
A recent survey of just over 2,000 18 to 24-year olds has discovered 37% are already in debt and owe an average of £2,989 (excluding student loans and mortgages). Over half of adults under 25 state that they regularly worry about money, with a fifth losing sleep over it. The debt comes from credit cards, overdrafts and loans, with 16% having one or more credit cards (with an average debt £856), 15% with an overdraft (averaging £1,180 overdrawn) and 12 percent in debt to family or friends (owing an average of £4,644). Taking student loans into account, the average student loan balance standing at £25,505.
69% are trying to manage their money and stick to a budget with 71% checking their online bank account at least once a week. Just over 1 in 4 know what their credit rating is and how it affects them. 42 percent say they have found managing their money harder than they expected.
How to teach children and young adults about money
Teaching children and young adults about money is important but it doesn’t have to be hard. Children who get up close and work with money more often, can spend and save and tend to do better with it when grown up. It is not often taught consistently in schools and so may fall to parents to teach them.
Let them touch and play with money, playing shop and seeing how it works in the real world. As they go to school, let them save for a new toy or take charge of a small supermarket shop and budget. You can also start to experiment with pocket money.
As they age, give them greater financial responsibility – set a good example and help them to take responsibility for their own earnings, whatever they might be.
Top tips for all ages
- Talk about money with them and in front of them
- Take them shopping with you to demonstrate the value of what you are buying
- Teach them how to shop around and to compare prices
- Get them to check the receipt
- Let them handle money and debit cards
- Talk about how they are going to save their money, from a piggy bank to a real bank
- Get them to count their money regularly
- Let them take small risks to learn that when it’s gone, it’s gone
- Take a day out and let them add up what everything is costing – give them a limit to stick to
- Offer them opportunities to earn money by helping out round the house
- Help them to understand that virtual money – money spent online – is actually also real money
- As they get older, encourage them to get a part-time job
What is money for kids, students and young adults?
Money is everything to everyone and it is only fair that children and young adults appreciate it. However, it means different things to different age groups – you can never start too early but make sure it’s age-appropriate.
Money for Children aged 3 – 5
Let them play with coins and keep a piggy bank.
Money for Children aged 5 – 10
Time to teach the value of money and letting them earn money but doing simple tasks.
Then they can decide whether to spend or save what they earn and find out just how much – or how little – their money will get them.
Money for Children Aged 10 – 16
Give them a weekly or monthly allowance for their spending and help them to work out a budget that will have to see them through to the next payday. Look at basic expenses, treats and saving. It’s a good time to start showing them your household bills and explain that it costs to switch lights on and leave taps running.
Young adults 16 and over
This is a critical time for financial education. Children will open their first proper bank account, earn their own money and learn more about the world around them. At this time, they need to understand budgeting, savings, pensions, credit and how it works, big purchases and investment options.
Learning how to spend what they need and put the rest towards their future is critical. Bring them into your financial conversations and decisions and get them to help you shop around for insurances and financial products. Talk to them about student loans or renting a property and paying for utility bills.
What can kids do to get money?
There are a huge amount of jobs around the house that children can do, starting from a very young age.
Tidying up toys and making their beds
Young children often play with hoovers and brushes. Give them the real thing and let them get going around the house. They can also help you to re-sell their old toys online and re-invest the cash in something new.
Older children can take on weekly responsibilities, like washing the car or cutting the grass. The week will come round soon enough and they will experience what work feels like, but also what payday feels like.
As they get older, they can take on paper rounds and part-time jobs outside the home, teaching them how to work for someone.
How to make money as a student
Working around your university course can be done, with a huge number of ways that you can earn money while being a student.
There are the more traditional jobs, such as bar tender or waitress, to keep you going through university but you can also turn to the gig economy for some ideas.
If you’ve got a bike and a smartphone, you can become an online takeaway delivery driver, for companies like Deliveroo.
Write and publish a Kindle eBook on anything that you can write about and you can self-publish on the Amazon Kindle store. Listing a book can be done by anyone and you’ll take 70% of the sale price from a book listed from £1.49 to £6.99. It is easier that you think.
Get cashback when shopping. You can save money and make money. Cashback sites pay you commission that they would have earned, which gives you cashback on what you buy online.
Sell your course books when you’ve finished with on Amazon Marketplace or around campus.
Be an Extra on the big screen – or the little screen, earning up to £80 per day. Look for your local casting agency.
Become a tutor and teach other who want to know what you know
Sell clothes on eBay – Fuel your wardrobe habit but selling your pre-loved clothes online.
How to save money as a student
The best way to stay on top of your student finances is to create a budget and stick to it. It’s true that you might need to dip into your student overdraft from time to time, so make sure that you have a 0% interest rate and have a student-friendly account.
Watch your mobile usage – you don’t want to get slapped with a huge bill at the end of the month, so get a good deal and then use your phone sparingly, seeking out free WIFI when you can.
Don’t sacrifice your student years for debt. Living as a student is a good time to experience life without all the luxuries. Make sure that you can afford your rent and your lifestyle without relying on credit cards.
Shop like a student and snap up all the special deals and discounts you can when you are out and about.
How to manage money wisely as a student
Managing money wisely as a student means that you make the most of your student loan, budget well and don’t run out of money.
Look at your income – add up your student loan, any grants and bursaries, any parental input, savings from summer jobs and income from part time jobs. That is what you have to work with.
Take out your tuition fees, rent, household bills – including TV license, insurances, travel costs, phone and food bills.
Work out what you have left to spend on food, clothes, wellbeing, going out, playing sports and buying educational tools.
There are some clever ways to make the money that you are left with to go further:
- Check to see if you can get free prescriptions on the NHS low income scheme
- Use your NUS card to get student discounts in as many places as you can
- Invest in a 16-25 rail card and save a third on rail fares
- Use comparison websites to get the best deals and keep energy costs down in shared accommodation
- Go with the best bank for your student account
Money education in schools
Financial literacy has only been part of the National Curriculum since 2014, however less than 1 in ten young people believe that they learnt about money in school with almost 20% claiming to be self-taught. just 8 per cent of young people said they learned the most about money skills in school, and 17 per cent said they were self-taught.
The London Institute of Banking & Finance (LIBF) polled young people and found that over 80% actually want to receive more financial education in school. Finances come under citizenship lessons and it applies to the secondary school age, but not to academies.
Often, money is brought into other lessons while students actively want to be taught about money separately, with two thirds wanting to learning more about student loans. The LIBF discovered that almost 9 in 10 young people want to find out more credit cards, mortgages and pensions, with over three-quarters not sure how taxation works.
Teaching money management in schools
From September 2014, financial education became a mandatory part of England’s secondary school curriculum. Students learn how to budget and borrow and live with the reality of credit cards, student loans and tax.
Learning good financial basics at a young age is key to understanding the different aspects of money management and have a greater awareness of financial. Children in secondary schools learn about money in the Mathematics and Citizenship curriculum, with individual schools deciding how it best works for them.
List of books to teach kids about money
- All About Money – Margarita Brown, Isaac Joshua Brown, Anna Kidalova and Sarah Brown – A workbook that will help your kids understand money, taxes and the economy
- Spend It! (Money bunnies – Cinders McLeod. For younger readers, helping them to decide why to spend, when to spend or not to!
- Managing Your Money – Jane Bingham, Holly Bathie, Nancy Leschnikoff and Freya Harrison. For teenagers, covering everything from student loans to internet banking and credit cards.
- Adventures in Finance with Bull & Bear: Saving for the Beach – Roy and Susan Kim. Follow Bull and Bear (like the markets) as we watch them save and spent their way to the beach.
- The Know-Nonsense Guide to Money: An Awesomely Fun Guide to the World of Finance! – Heidi Fiedler. Looks at every aspect of money, saving and spending and even looks at bitcoin.
- The Lemonade War – Jacqueline Davies. A tale of lemonade stand wars set against a backdrop of marketing tips for making money, definitions of business terms, charts, diagrams, and math problems.
- The Meaningful Money Handbook – Pete Matthew. Written by personal finance expert Pete Matthews, this handbook fits everything you need to know about your finances.
- The Year of Less – Cait Flanders. Author Cait Flanders banned herself from shopping for 12 months and we track her journey, working out what we’d do in her shoes.
- The DIY Investor – Andy Bell. Investment for beginners!
- Young and Mighty – Henry Patterson. This 13-year old author has already got his own brand and takes young people through entrepreneurism.
What do young adults spend their money on
Teen spending adds £1.7 billion to the UK economy with over 80% of that spent on gaming, socializing with friends and clothing, with an average spend of £54 a week. Research carried out with 2,000 young people, aged 13 to 19, shows that they spend 60% and save 40% for big ticket items, like holidays. They may be more savvy than you think, with eBay providing second-hand options that are more sustainable. Over 80% of young adults are able to save some money each month.
Loans for young adults
Young adults can apply for personal loans from the age of 18, but you might find it harder to get a low interest rate loan. There are some deals that are only eligible to those aged over 21 or 25 years old. For all loans, you will need to be a UK resident and have sufficient income for the monthly repayments.
On application, your credit rating will be checked, even if it is your first instance of borrowing. It may mean that you have higher interest rates for your first loan.
You may also be eligible for student finance, a guarantor loan (where a family member ‘guarantees’ to cover the payments if you can’t) and car financing
Personal loans for young adult
Personal loans for young people can help you to make your first big purchase, like a car. A personal loan is an unsecured loan that is not secured against a property. It will attract higher interest rates but comes with less risk attached. Consider how much you need to borrow and the repayments that you can afford.
Loans for young adults with no credit
You will need to be at least 18 to take out a loan and -because it is your first time, you will attract higher interest rates than others who already have a credit rating. You can check out your credit rating, with one of the credit agencies, to see if you can do anything to improve your credit rating and lower your interest rate.
Loans for young adults with bad credit
If you are looking for a loan at a young and don’t have a good credit rating, you might be able to take out a Guarantor loans. Guarantor loans were created to let people with poor credit work with friends or family, who will act as a guarantor. As a guarantor, they will become jointly responsible for the loan, stepping in to pay it off if you fail to keep your repayments up.
Home loans for young adults
Finding the right home loan if you are a young adult may take some researching but you should be able to find one that works for you. Often, lenders only accept applicants aged 21 or over, with few accepting 18-year-old borrowers. You will need to work out what you can afford to repay – comfortably – which is also what lenders will look at.
Business loans for young adults
Young adults have a good choice of business loans available to them, including the Prince’s Trust Enterprise Charity Programme, which offers loans of up to £5,000, if you’re aged between 18 and 30 and not in full-time education. The government’s New Enterprise Allowance Scheme gives a weekly allowance of up to £1,274 for 26 weeks and a loan to cover start-up costs, that’s repayable over 5 years. The government’s Start Up Loan Company lets new businesses borrow up to £25,000 at a fixed rate of 6%, a year off repayments and then between 1 and 5 years to pay back the loan.
You can also approach the bank and other lenders to apply for a more traditional business loan. This might be especially viable if you have friends or family who will act as guarantor.
Debt consolidation for young adults
Debt consolidation loans for young adults mean that you can borrow money to pay off your existing debts through just one loan. The loan takes away lots of different debts to different people, making it easier for young people to manage with just one monthly repayment to one lender. Debt consolidation loans can be used to settle credit card debt and other personal loans. Young adults might be more likely to apply for an unsecured consolidation loan, which means you don’t have to own a home to get a loan.