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Young employees reliant on borrowing money

Young people are dealing with spiralling debts and rising stress over finances, according to research by Neyber

The DNA of Financial Wellbeing – Our borrowing needs report found that 70% of people under the age of 34 need to regularly borrow money either to pay their monthly bills or day-to-day living expenses. Additionally 16% of 18- to 24-year-olds said that their finances were out of control, while 20% of 25- to 34-year-olds said they were only just coping.

The average unsecured debt among 25- to 44-year-olds was £14,794.35 in 2018, suggesting that debts are spiralling among young people. This leads to young people turning to more high-risk forms of lending just to get by, the research found, with 33% of 25- to 34-year-olds using credit cards for day-to-day borrowing.

These financial concerns were found to be affecting work performance, with 45% under the age of 34 saying that money worries affect their job performance, and 40% that they affect their relationships at work.

When employers were questioned about whether financial worries cause changes among employees, 68% agreed that they affect individuals’ behaviours, 69% their performance, and 67% relationships at work. However, fewer employers believed that their employees are borrowing money this year, from 97% in 2017 down to 77% in 2018.

Heidi Allan, head of employee wellbeing at Neyber, said that fluctuating income levels may be causing young people to borrow more.

“The survey shows a real disconnect from what employers are thinking and what’s reality, particularly for younger employees. One of the reasons for this regular borrowing may be that more young people have jobs with fluctuating incomes,” she said.

Allan also outlined the impact that money-related worries can have on wellbeing.

“Financial worries can lead to sleeplessness, stress and even depression," she said. "Our research demonstrates that young people in Britain are not coping and are having to borrow just to get by. More needs to be done to support people; whether that’s providing better financial education in schools, working with employers to offer their young staff financial education or even providing debt support and guidance.

"If we don’t act now we will see young people in Britain spiralling into debt they’re unable to repay."

Borrowing can become problematic when employees are reliant on it, CEO of debt management charity StepChange Phil Andrew added.

“There are nine million people who have to use credit to pay for essential expenditure. This includes more than one million people using high-cost credit to make ends meet. When borrowing becomes a safety net for meeting basic needs the outcomes are often bad,” he said.

“Employers have a strong interest in improving the financial wellbeing of their employees and can be well placed to sell the benefits of seeking advice before problems get out of control. This report gives a call to action to ensure working life is a source of support rather than worry for young people struggling with their finances."

Neyber surveyed 10,000 UK employees.