Financial education Why do young people get into debt?

Risk factors, first signs and what parents can do.

by UBS Insights 29 Mar 2019

You read about it more and more: young people who get into debt on the road to financial independence. But how can this happen? We have put together significant findings from various studies and compiled tips on preventive measures.

Statistically, young adults aged 18 and over with a low level of education, incomplete training, a lack of professional qualifications, and low income are most at risk.
What parents can do: emphasize the importance of school and education and provide active support so that their child succeeds in completing their studies.

In addition to unemployment, over-indebtedness often starts with young parenthood, leaving the parental home (too) early or – especially in the case of young women – emotional dependencies on partners.
What parents can do: be involved, discuss the situation together and, if necessary, seek professional help.

Psychological factors are just as important as the financial skills learned. Self-confidence, the ability to postpone rewards and self-control are important safeguards. Young people who have the confidence to handle their money well and who have control over their own scope of action are less likely to get into debt.
What parents can do: transfer financial responsibility and trust to their children early on and in a controlled manner.

Give your child personal responsibility

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Strong consumerism encourages over-indebtedness. This is especially true if young people have low self-esteem, and are easily influenced by and closely connected to consumer-oriented peers.
What parents can do: set a good example of sensible consumer behavior and discuss the purpose of different purchases. Consciously convey non-material values and sharpen perception of what really counts: spending time with family, having fun with friends, being appreciated for what you are – and not what you have.

Useful tips