Young people most reliant on debt as cost-of-living bites

• Young people (18-24 year olds) are 7 times more likely to have taken out new or additional debt in the past 12 months, or expect to in the next 12 months, than their grandparents’ generation (51% vs 7% of 66-75 year-olds)[i]

• More than 1 in 5 under 25s are currently worried most about debt

• Over a third (36%) of young people worrying about their personal finances right now say it is negatively impacting their mental health

In an online survey of over 5,000 adults across the UK*, TSB’s Money Confidence Barometer reveals that young people are the age group most reliant on debt. Over half (51%) of 18-24 year-olds have either taken out new or additional debt in the past 12 months or expect to do so in the next 12 months – around 7 times as likely as those of their grandparents’ generation (just 7% of 66-75 year-olds) – showing the generational divide on reliance on debt during the cost-of-living crisis.[ii]  

The data shows that these funds are mostly being used to cover rising household bills (22%) such as rent, mortgage, council tax, electricity/gas, insurance, etc., or groceries (21%).[iii] Under 25s are also among the age groups most likely to struggle with keeping up with the repayment of their bills or credit payments, with 60% of 18-24 year-olds saying it is a burden.[iv]

TSB’s own data shows that comparing October 2022 with October 2021, the proportion of 18-24 year-old customers going overdrawn is 10% higher.

The Barometer shows the impact this is having on young people’s mental health. More than a third of young people (aged 18-34) who are worried about their personal finances say this concern is having a negative impact on their mental health.[v]

More positively, younger generations are more open to asking for advice or support about their finances than their elders, with a fifth (21%) going to a friend and a sixth (17%) consulting their banks. Parents and guardians remain the most favoured options for advice, with almost a third (32%) of young people turning to them for guidance.

Nicola Bannister, Financial Support Director at TSB said: “Our findings show that this is a particularly difficult time for younger people who are much more likely to turn to debt to get by. TSB is ready to help with any advice they might need and we’re already contacting some customers to signpost them to the support we offer.

“In addition, we're working with partners and schools to increase understanding of financial matters for young people.”

Money Confidence slips across the UK as day-to-day costs rise

Against this backdrop, TSB’s Barometer reveals that Money Confidence – our measure of the nation’s confidence in their financial outlook – has fallen sharply across the UK, standing at just 5.6/10 across all respondents compared to 6.2 in June. Low confidence has risen to 40% up from 30%, with women in particular feeling the hit – almost half of women (45%) now report low money confidence.[vi] 

Furthermore, 6 in 10 people say they feel financially worse off this year compared with this time last year (61%).[vii] Unsurprisingly, of the things that worry them most about their finances right now, home energy costs are most common, with almost two thirds (62%) of all respondents citing this worry.[viii] With the crisis expected to continue and potentially worsen into the new year, most (89%) remain concerned that home energy bills will increase over the next year, with more than half (52%) ranking this as their top concern about increased household expenditure.[ix]

However, Brits are taking action where they can in order to cover the cost of rising outgoings. As well as taking out debt, the data shows that of the quarter (24%)[x] who have taken more money out of saving or investments over the past 12 months than have put in, almost half (48%) have used this to cover increased cost of fixed monthly outgoings or household day-to-day living costs.[xi]