Research by StepChange Debt Charity has revealed that low pay, unemployment, and high housing costs are significant contributors to debt issues among those aged 18 to 24.
The report, titled ‘Debt’s early grip’, found that the charity’s young clients’ incomes were 28% lower compared to older cohorts, equating to a monthly difference of £490.
Rent consumed around 38% of younger clients’ net incomes.
The findings showed that 37% of young clients seeking debt advice were living with family, which was less than the 58% of all UK adults aged 18 to 24.
53% of young clients were renting, facing debt across various household bills, except for mortgages.
Social media influenced young adults’ financial attitudes, as 28% of social media users aged 18 to 24 reported starting or increasing their savings after seeing financial content online.
Half of this age group had taken financial action due to social media, compared to 27% of all UK adult users.
Vikki Brownridge, chief executive officer at StepChange Debt Charity, said: “Young adults are bearing the brunt of several years of economic crises.
“For those just starting out in their careers or looking to move out of their parents’ home, obstacles like ever increasing housing costs, low pay and insecure work are huge barriers, and in some cases are tipping them into problem debt.
“Among our younger clients, even with the majority being in work, this is not sufficient to keep them out of debt – in fact they are more likely to be behind on household bills than all clients as they struggle to cover the basics on a lower income.
“We welcomed the Government’s recent commitment to implementing a single adult rate for the National Living Wage, which will help to close the gap for younger adults and ensure that work pays.
Brownridge added: “However, in a climate where even many young people in full time work cannot afford essentials, they are left with little hope of building savings.
“We need to see the Government ensure Universal Credit is sufficient for young people with low incomes to make ends meet and prioritise reducing the cost of essentials like energy, housing and council tax.
“The extension of the Help to Save scheme to 2027 announced at the Budget is welcome – we would now like to see the Government incorporate lessons learned from the scheme to increase take-up and help young people with low incomes to save for a rainy day and create a more secure financial future.
Brownridge said: “For any young people struggling with their finances, help is available—StepChange offers free and impartial debt advice online or over the phone to anyone over the age of 18.
“While social media can be a useful tool for getting tips on your finances, it’s important to be wary of misinformation or inaccurate advice.
“Always make sure you’re seeking debt advice from a reputable source.”
