16th September 2014
Three quarters of adults in their twenties have made financial mistakes that have ended up costing them for years to come.
A new study from the Government-backed Money Advice Service reveals that a quarter of those who admit to having made a money error could not afford essentials like food and transport as a result.
Twenty-two per cent of respondents say they spent too much on credit cards, with 15 per cent saying their debt spiralled out of control.
Ten per cent admit they have taken out high-interest credit, such as payday or doorstep loans, while 36 per cent say they “used their overdraft as if it was their own money”’.
Nine per cent have moved into a flat or house they could not afford while seven per cent bought a car which was beyond their means. Twenty-seven per cent have spent too much on holidays.
When it came to rectifying their mistakes, 42 per cent borrowed money from their parents or friends, while 11 per cent had to move back home. Thirty-three per cent were able to use their own savings.
Nearly half of those who had made money mistakes admitted to feeling depressed as a result, while 27 per cent were left with a poor credit rating.
Kirsty Bowman-Vaughan, young people policy manager at the Money Advice Service, says: “It is so easy to get into financial difficulties when you are young and not aware of all the risks of credit. You suddenly see all these letters from banks offering you a big overdraft or a credit card and it can seem like you have hit the jackpot. But of course the reality is you don’t actually have any more cash at all – simply lots of ways to get into debt.”
She adds: “Parents should speak to their children about the dangers of unmanageable debt – this is because the attitudes we form towards money in our earlier years tends to impact habits for the rest of our lives.”