Valley First

Young People Fear Debt

Debt identified as biggest financial fear among young people
August 13, 2013

Penticton, B.C.—According to a recent U.S. survey, 54 per cent of people aged between 22 and 32 view debt as their biggest financial fear with paying off student loans topping the list of concerns.

Further results from the Wells Fargo survey show 42 per cent of 22 to 32 year olds feel their debt is overwhelming. With more than 62,000 people falling into this age range across the Okanagan, Similkameen and Thompson valleys, in local terms that potentially translates to more than 26,000 young people who may be overwhelmed by their debt.

Valley First’s Dan Turner says while the survey results are from the U.S., they generally reflect what he is seeing locally.

“Independent young people have a lot of financial obligations,” says Turner. “On top of the general cost of living, many are trying to complete their education, launch into careers and establish themselves in the community. At Valley First, we talk to all our members about proper financial management; this includes how to handle debt.”

The Wells Fargo survey also shows if they were given $10,000, the first thing half of all 22 to 32 year olds would do is pay down student loans or credit card debt.

“It’s encouraging to read that paying debt is a priority for so many,” says Turner. “The longer we carry debt, the longer we will continue to carry debt. At Valley First, we tell all our members, by establishing healthy financial behaviours early in life it becomes easier to create a brighter financial future.”

Along with prioritizing debt repayment, Turner says many young people could benefit from a better understanding of good debt and bad debt.

“Student loans are often considered good debt, because you earn something—a qualification—while taking on debt,” says Turner. “On the other end of the spectrum, credit card debt is usually considered bad debt as credit cards are so often used for everyday and impulse spending and we are left with little to show for our expenditure when the bills start coming in.”

While they have concerns about debt, many young people believe owing money is temporary and that as they get older their earning and purchasing power will increase, eventually outpacing the comparative spending power of their parents. With growing purchasing power, financial education becomes increasingly important, too.

“Recent history tells us each generation has enjoyed comparatively greater spending power than the generation before them,” says Turner. “This is good news, but requires a long-term view. Ask any successful money manager when you should start financial planning and they will tell you ‘as soon as possible.’”

About Valley First

Valley First is a division of First West Credit Union, B.C.'s third-largest credit union, which has 40 branches and 29 insurance offices throughout the Lower Mainland, Fraser Valley, Kitimat and Okanagan, Similkameen and Thompson valleys. Led by Launi Skinner, First West has $7.1 billion in assets under administration, more than 171,000 members and close to 1,300 employees.

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