You think homework and their hobbies are all young people should think about? Think twice! Your children’s late teenage years and early twenties don’t only create a valuable foundation for their education and later career, they’re also the years that see them making their first financial choices. And you want them to be smart ones, right?
To help young people understand the impact of a bad credit rating, Online Mortgage Advisors have created an interactive tool that allows young people to compare future mortgage rates depending on their credit rating as well as a list of useful tips on clever spending and responsible borrowing.
Why young people should think about their credit rating now!
According to research by student money advice website, Save the Student, students are increasingly relying on high-interest credit to get them through university with 83% of them using their student loan to finance their time at university, 43% using their overdraft, 12% having signed up to a credit card and 2% using a student loan separate or in addition to their government-issued student loan.
Those not at university are struggling even more. According to the Office of National Statistics nearly a third of 16-24-year-olds have financial debts, with half of them having debts of 40% or more of their annual income.
“Although teaching young people about managing money became part of the national curriculum in 2013, it’s clear more needs to be done to help young people realise the potentially damaging effects of getting into debt,” Pete Mugleston, Director at Online Mortgage Advisor added.
37% of 18 to 24-year-olds currently hold one or more credit card, have an overdraft and are owing a combined average of £2,989. The same number of people say they do not have a plan in place to repay the money they currently owe and 10% of those questioned admit to having missed at least one payment in the last 12 months.
“We think it’s vital that the UK finance sector gets onboard the Get Smart About Credit initiative, promoting awareness about the issue of young people and debt. Working with banks, credit agencies, educators and other big players in the finance space is necessary in order to stamp out debt for young people.”
If you want to find out how to improve your credit rating, check out one of my past blog posts on the topic but there are also a couple of #topmoneytips that you can share with the young people in your life to make sure they don’t have to worry about debt or their credit rating.
Money saving tips for students
Get yourself a student discount card and carry it with you wherever you go. You’ll be surprised how much money you are going to save by just showing this little plastic card at the till and the best thing is, absolutely everyone can get a student discount card and save money at 123 shops including The Co-op, Superdrug and dozens of restaurant chains.
Have a no-spend day each week. Plan activities that don’t cost you any money, eat what you’ve got in your cupboard and challenge your mates to join you. It’s so much easier to do when you’re all sitting in the same boat.
Depending on the time you go shopping, you can make some real savings. Supermarkets reduce perfectly fine food items by up to 75% each day, so check out the best times to make savings on groceries in your favourite supermarket and make your money go further. If you want to save even more cash, check out these 10 ways to save money on groceries.
Something even better than saving money is not spending it at all while still getting something new. Check out this ultimate guide to getting freebies and get free beauty products, cinema tickets, food or condoms.
If you regularly shop online, sign up to a cashback website and earn whenever you shop. Most retailers offer shoppers a set percentage of money back whenever they shop through a cashback site. There are even some credit cards that offer cashback rewards but be sure to use your credit card wisely and only for things you really need.
What are your top tips for students who are looking to build up a good credit rating? Let me know in the comments below!
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