YEP Says: Paying the price for vicious circle of spiralling debt

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IT’S a sobering thought that today’s generation of young people are on track to be the first in more than a century to be materially less well off in adulthood than their parents. No longer can they count on the so-called ‘bank of Mum and Dad’ to help pay for the transition from childhood to adulthood, whether it be a first car or a deposit on a home.

This is borne out by new research from the debt charity StepChange which reveals a shocking increase in the level of indebtedness afflicting the over-60s. Far from looking forward to reaching their retirement with a financial nest egg, people contacting the organisation owe £13,644 on average. However this stark statistic does not take account of those people whose incomes have simply not kept up with increases in the cost of living. Though nearly 10 years have passed since the banking crisis and global recession, their finances remain on a knife-edge.

Though the reasons are myriad, the Government must find innovative new ways to reward savers – pension funds have been badly hit by historic low interest rates. The challenge is doing so at a time when the young are already struggling to make ends meet without contemplating distant issues like pensions and care costs. However this problem is not going to disappear. It is only going to get worse unless there is a change of culture when it comes to personal finance and savings.