How to Help The Next Generation Avoid Being Strangled By Debt
Budgeting and managing finances does not come naturally to everyone. Taking care of money is often something we simply have to learn with time. This can mean learning from costly mistakes, but if we pass this knowledge on to the younger generation it could help millions’ of people to avoid being strangled by unnecessary debt.
As process servers, we see time and time again situations where teenagers and young adult lives are turned upside down due to poor money management and a lack of understanding of the cost of living. It can tear families apart and it can ruin people’s lives to be under such financial strain. To assist and help understand the problems we have provided some information on how you can help the next generation manage their money:
Why Do Young Adults Struggle With Money Management?
The answer is quite straightforward; think back to what you were like in your younger years. Can you honestly say that you cared about saving money or managing your finances when you were 15 and 16 years old?
We all know the feeling – you have just started your first job, and received your very first pay cheque. You have this (what seems like) large sum of money and all you can think about is how you are going to spend it! You can buy some new clothes, go out with your friends and maybe even buy that new mobile phone you wanted! Did you ever stop to think about saving any of that pay cheque? Probably not! Whilst this is perfectly acceptable initially, there is some point where you have to ease the spending and take some responsibility – this often does not happen.
What can you do to help?
There are actually many things you can do to help the situation. It may take time, but if you take into consideration the pointers we have listed below, we believe you can change the younger generations’ outlook on money for the better: If someone you know is already in debt and needs help StepChange Debt Charity provide free expert debt advice.
Explain the importance of budgeting
In most cases, teenagers simply do not understand how to budget – why would they? You can greatly help their financial understanding by explaining how a budget works and why it is beneficial. Explain to them about putting money aside for bills, and setting direct debits up for example. Furthermore, you could even help them create a budget spreadsheet they can use to record their financial transactions etc.
Explain the importance of savings
If you ask a young adult to save money, they may simply ask; why? What possible need could they have to save their money? To counter this, you must explain to them why savings are important. Explain to them why savings can provide a safety net if you experience financial trouble. Explain to them how savings can be used to pay for vehicle repairs or even a deposit for a house. If they understand the benefits of saving money, they will be more inclined to do so!
Explain the true cost of owning property
This is another major area where teenagers can struggle with money. Some young adults may rush to rent accommodation but not fully understand the involved costs. Owning or renting property is a huge responsibility and there are numerous costs involved – utilities, broadband, insurance, rent and TV licence to name a few. If you explain to a teenager costs such as these, they should have a clearer idea of what they can realistically afford and avoid making a poor financial decision.
Explain the dangers of debt
Some young adults can often dismiss the dangers of debt. It is prudent to explain exactly why debt can be so harmful. Consider explaining how credit card bills can pile up, and how interest payments become progressively worse. Explain about loan sharks, payday loans, repossession and also how a negative credit rating can affect their future prospects. If they understand just how dangerous debt can be, they will hopefully avoid it!
We hope you have found this information invaluable – we understand the problems teenagers and young adults face and we feel it is important to aid them in their financial struggles. With a little nudge in the right direction and some sound advice, you can make a huge difference.