Will your children be forced to borrow for life’s essentials?
Written by Trevor Keidan on October 25, 2017.
Consumer credit in the UK is growing in double figures each year and young people are the most susceptible. And it’s not all about buying the latest gadgetry on credit and partying hard. Disturbingly, increasing numbers of young people are borrowing in order to cover basic living costs such as food and accommodation. Research by PWC revealed that 20% of 25 to 34 year olds have done so in the past six months.
The situation is so serious that the Chief Executive of the Financial Conduct Authority, Andrew Bailey, has spoken out about the issue saying “There is a pronounced build-up of indebtedness amongst the younger age group. We should not think this is reckless borrowing. This is directed at essential living costs. It is not credit in the classic sense, it is [about] the affordability of basic living in many cases.”
It highlights just how bleak the outlook is for our children. So as parents, what can we do to protect them and give them the best possible financial start in life?
Education is key. And in more than one sense. Firstly, it is important that we teach our children the financial basics. Given just how integral financial skills are to navigating life for every single one of us, it is astounding that these are not taught at school. As parents it is up to us to teach healthy behaviours and raise children who are mindful consumers, savers and investors. Teaching that money is finite and that we have to make financial choices, that sometimes you have to save to get something that you want and that savings earn interest are all great lessons best learned early.
Education is also essential in determining the future earnings of your child. Studies prove that graduates not only earn more but are much less likely to be unemployed. Even though the cost of a university education is high, in the long term it is well worth it.
You can ease the financial pressure on your child by starting an education fund early. By contributing to this month by month from when your child is very young, you will spread the cost of their fees over years and build up a pot of cash. Not only that, but your savings will be earning compound interest which, over a period of 15 years, for example, can make a huge difference.
Should your child decide not to pursue a tertiary education, I can assure you that they will find a way to spend your money! It could be used as a deposit on a house or as the initial investment to start a business. It won’t be a decision that you regret.
There’s no disputing that life is tough for young people today but you can certainly lighten the load by planning ahead. Infinity can help with professional advice on financial planning throughout Asia. Our expertise in the specialist area of education planning can help you give your children the best possible start in life so that they never find themselves faced with the harsh choice of staying debt-free or eating. Drop us a line at firstname.lastname@example.org to get a head start on securing your children’s financial future.