The millennial mindset towards debt in the UK
The modern world has a lot of strange qualities. Debt has become rampant. After WWII, generations have had a poor mindset around credit and the debt that comes from it. Debt should always be your last option. It should be avoided at all costs. Millennials were told by their parents that they would have a good job, a home, a car, and the ability to spend credit.
This generation has become prone to spending, which often comes from the way the millennials were taught. They have been given a bad deal in many ways. Young people were shown that they could use credit when they need to. It is only beneficial, however, if you pay back the money immediately. Taking on credit is financially risky. Millennials are working and living with the feeling that they may never own property or be able to retire. This starts with student debt.
One of the biggest problems for millennials is student debt. Whether on their own volition or with the encouragement of their parents, millennials have taken out student debt more than any other generation. With university prices going up, many young people are taking our loans to go to the school of their dreams. The numbers, however, are not encouraging.
Breaking down the numbers
According to a survey from the publication Business Insider, over 2,000 people were questioned with the help of Morning Consult. 51.1 percent of this generation admit to having debt. 67.4 percent say that they are stressed about it. Almost a quarter of these individuals have taken out personal loans. 28 percent of millennials have student loan debt and 46 percent of them are better off than other generations. Even though millennials are taking out student debt, this has to do with what their parents taught them over the years.
In order to change these habits, the mindset needs to change. Debt, including student loans, should only be taken out as a last resort. The money should always be paid back immediately. The number of people who use loans is not small. According to the MoneyPug, which is a website used to compare energy tariffs and loans, 25 percent of people who take out 401 (k) loans take them out to make ends meet. 23 percent of these people use loans to pay off other debts, according to Greenwald and Associates. Paying off debt with loans is not paying the money back at all. The only reason to take out a loan is when there are no other options.
Changing the paradigm
We must teach our kids to avoid debt. While the Millennial generation is not the worst when it comes to using credit, student loans are a unique problem they are having to deal with. Loans should not be viewed as something they can use whenever they need money. Only people who have no other option should go into debt. It is absolutely imperative to pay back the money that you are given in a loan as soon as you can. If you take out a student loan, a 401(k) loan, or any type of loan, you should do your best to pay it back. Making the minimum payment will not help you get out of debt. This is a huge problem in general. People often pay only the smallest amount each month. When you do this the interest adds up and will make you pay a lot more in the long run.
Whether you are a Millennial or not, changing the mindset surrounding debt and loans is very important. We will not be able to move forward if the mindset continues. More people will take out loans, go into debt, and pay back the money too slowly. If you are loaned the money, you need to pay it back as soon as possible. It all begins with the way you think about loans and debt. It is always a last resort and it should be treated as such. When you avoid loans, pay back debt immediately, and do your best to stay in good financially standing.
Photograph by Steve PB