18-25 year-olds in Wales have higher levels of personal debt than anywhere else in the UK, owing an average of almost £10,000.

New figures from free debt advice provider PayPlan show that whilst calls to its helpline from every other age group have decreased over the past five years, calls from 18-25 year-olds have more than doubled, with an increase of 117%.

The statistics, which do not include student loans, show that young people in Wales who sought advice had amassed average debts of £9,263.63 each. The top three causes are listed as being general overspending by taking on too much credit, reduced income, and ‘hardship’, which might include those who are temporarily homeless, single parents or recipients of benefits.

Young people in Northern Ireland were found to have the lowest debt levels, but still had average financial deficits of £6,485.11 per person.

The average debt figures for 18-25 year olds in the rest of the UK continue to paint a bleak picture:

  • Wales – average debt of £9,263.63.
  • South East – average debt of £9,045.48.
  • North East – average debt of £8,303.99.
  • Yorkshire & Humberside – average debt of £7,836.87.
  • North West – average debt of £7,771.34.
  • South West – average debt of £7,603.58.
  • East of England – average debt of £7,478.39.
  • Scotland – average debt of £7,359.78.
  • West Midlands – average debt of £7,080.97.
  • East Midlands – average debt of £6,921.30.
  • London – average debt of £6,855.61.
  • Channel Islands – average debt of £6,564.42.
  • Northern Island – average debt of £6,485.11.

Jane Clack, money advisor at PayPlan, also commented on the findings:

“We’re seeing an increasing number of young people starting their adult lives in debt. It’s a situation that’s getting worse and our concern is that these figures are likely to increase, as they get older.

“There’s been a lot of talk about the National Living Wage at £7.20 per hour making a big difference but that’s for people over 25. The minimum wage for 21-24 year-olds is £6.70 per hour, whilst for 18-20 year-olds it’s £5.30 per hour.

“In a way, this age group is becoming the forgotten generation when it comes to debt. It’s almost expected that young people will rack up a bit of debt whilst studying and enjoying themselves, but remember our figures exclude debt associated with the student loans company.”

Mandy Rutter, psychologist and counsellor at employee assistance and wellbeing provider Validium, believes that the results highlight the impact of a new perspective on money, combined with generations of poor financial education and debt. She explains:

“Whether it’s from school or family, our financial habits are picked up at an early age. The generation in question did not receive any lessons on sensible money handling as part of the national curriculum and for those with parents struggling with their own finances, it’s not hard to see how they have fallen into budgeting problems of their own. Debt is often a generational issue.

“Add to this the concept of ‘invisible money’ –  it is now easier to spend than ever with contactless payments almost everywhere, including bars and nightclubs. Young people rarely visit a branch of their bank and so hardly ever speak to a financial advisor. As money becomes less tangible, people simply can’t see their problems until it is too late and they face real trouble.”

Jane Clack added: “We need to do more to change this perception that it’s acceptable for younger people to get in to debt and that they can pay it off when they’re earning more. What if that day never comes?”

For more information on PayPlan, visit www.payplan.com or call 0207 760 8976.

 

Case study:

James (26)

After leaving home at a young age James, a finance administrator from Birmingham, found himself working in a poorly paid job.  That, and the mounting pressure to pay and keep up to date with bills, soon saw him falling into debt.

“I then took out a Payday loan, two credit cards and two overdrafts to cover the existing debts I couldn’t afford to pay,” said James.  “I also think I was naïve when it came to credit – everyone just assumes ‘I’ll pay that back next month’.”

James originally approached his creditors and managed to sort out a payment plan of £200 a month.

“I was still being called, chased and sent letters by the creditors and it was a nightmare. The payment plans were in place but some of the creditors continued to add on interest.  I felt I was getting nowhere fast.”

The mounting debts started to affect his home life and although he told his family about his circumstances he couldn’t tell them how much he owed.  “Living with debt is stressful and caused me much anxiety,” James added.

With debts of almost £7,000 he contacted a debt management company and although he was paying £129 a month, they were charging him 30% in admin fees, reducing the actual amount being paid to his creditors.  It was at this point James searched online for professional help and found PayPlan.

“PayPlan helped me because they were friendly and willing to help.  A Debt Management Plan (DMP) was set up quickly and efficiently and money was paid to my creditors that same month.  The letters, calls and e-mails stooped.  The situation I was in wasn’t treated negatively and a fair, affordable payment of £100 a month was agreed upon.

“I have made adjustments to my life, and the way in which I approach bills, credit and savings has totally changed.  For the last six months all of my bills have been paid on time every month.

“It has made me a much happier, more relaxed and calmer person which has to be a good thing!  I also feel settled and reassured in knowing that the debt is being dealt with.”

For press enquiries please contact our PR and Campaign Manager, Tracey Davies: tracey.davies@payplan.com