The number of British 16-24-year-olds seeking help to manage their debt has soared.
In fact, since 2016 to 2017, the number of young people in the U.K. reaching out to the Financial Ombudsman Service for help with loans, overdrafts and credit card debt has increased by over 200%.
The figures, released following a freedom of information request, reveal that British Gen Z consumers are more concerned about their ability to manage debt than their older peers.
But what’s behind the concerning trend?
A recent survey commissioned by the Centre for Social Justice (CSJ) and the debt collection agency Lowell found that 68% of young people in the U.K. reported that a lack of money management skills is a key factor in driving them into debt.
To address the situation, the two organizations have teamed up to launch the Financial Education Initiative, a research and policy program that will examine levels of financial literacy and identify shortcomings in the U.K.’s approach to financial education.
And while it wouldn’t solve problems faced by young adults today, previous studies have pointed to the need to ingrain healthy financial habits from a young age.
Research conducted by GoHenry, in partnership with Censuswide and Development Economics, found that adults who didn’t receive financial education as a child are now more likely to fall into debt because of missed payments.
The study noted that 79% of adults who didn’t receive financial education have fallen behind on utility bills or council tax payments over the previous six months. They are also more likely to be unemployed or earning less than the national average wage.
What’s more, the research indicates that prioritizing financial education could benefit the U.K. economy to the tune of 6.98 billion pounds ($7.92 billion) each year, adding over 200 billion pounds ($226.87 billion) by 2050.
While the likes of GoHenry, a debit card and financial education app for under-18s, are oriented toward the adults of tomorrow, there are also a number of FinTech solutions looking to empower older Gen Zs with the skills they need.
For example, Quirk, a U.K.-based financial wellness platform, combines open banking account information services with budgeting features and financial planning tools in a gamified app with social features that is designed to appeal to Gen Z.
By collating financial information in a single place, and offering personalized advice on managing finances, Quirk hopes it will help its users better understand their money and make more informed decisions.
Another British financial education startup targeting Gen Z consumers is Zeed, a short video platform that hosts educational content and allows users to invest directly from the app.
With the marketing slogan “watch, swipe, invest,” Zeed is hoping to appeal to younger investors who have grown up getting their advice as much from Reddit and TikTok as they have from more institutional sources.
Ultimately, money management is about avoiding unsustainable debt, and for young adults navigating these challenges in a digital world, it is important that educational tools are available to meet unique needs.
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