Young people across Scotland believe that schools, the banking sector, and their friends and family, need to talk to them about credit and debt, according to new research from Carnegie UK and Young Scot.
Repay Right spoke to young people from Fife Gingerbread Teen Parent Project; Alloa Academy; Link Living and Link Academy; Rathbone Training Centre; and Edinburgh College. 53 young people volunteered over 200 hours of their time to inform the research.
As well as finding that many young people had a lack of knowledge about credit, the research also found that young people have a fear of debt and see it in very black and white terms – with many believing that debt is inherently bad.
Young people identified three areas which could help them have a better relationship with credit and debt.
Information and Learning
Young people want this to come through schools, being able to be more open with peers and family, and trusted sources of information such as youth workers.
Young people want accessible information on the type of credit available, the technical terms surrounding credit and debt, and clearer and accessibly written terms and conditions.
Consequences, Myths, and Actions
Young people fear the consequences of not managing their money well, how it affects credit ratings and scores, and to understand ways that they can responsibly manage being in debt.
— Young Scot (@YoungScot) November 16, 2018
The research also showed that young people want to take responsibility of their finances, but they said that to do this they need to develop trust and understanding with the people giving them information and advice. When looking at solutions to increasing their financial literacy young people said that information online is often confusing to navigate and that they would rather talk face to face.
Louise Macdonald, Chief Executive of Young Scot, said: “Many of us take for granted an understanding of financial institutions and the products they offer, but with years of rhetoric around austerity, television channels full of shows about repossessing goods from bad debtors, and much more, young people are understandably fearful.
“Young people want to take responsibility for their present and future – but more efforts need to be made to engage them to allow them to take full advantage of what is on offer.”
Douglas White, Head of Advocacy at Carnegie UK, said: “Almost all of us make use of different types of credit at different points in our lives. Credit can cause difficulties but it can also bring significant benefits. Understanding the range of credit products available and the pros and cons of these, can be highly challenging. This study shows that young people are often very wary of credit – and while this can be beneficial it also means that young people are not building up their knowledge of services that they may wish or need to use in later life. It’s important that we find new ways to help young people develop their skills and expertise in ways that work for them.”
Other recommendations from young people included having information on simple ways to build up credit rating, removing jargon from financial products aimed at young people, and incorporating financial education into schools.
Download the full Repay Right report here.