Thrifty Loans

Young people in Britain today are attempting to pursue a celebrity lifestyle on guttersnipe wages, and the numbers simply don’t add up.

Experts claim that such a high-spending lifestyle beyond affordability is akin to committing financial suicide, and they are showing a reckless attitude to borrowing. Bankruptcy is not seen as shameful, but rather as a tool to get clear of large debts which they have built up by spending on the latest fashion, holidays in exotic locations and an endless round of socialising.

The research was carried out by the Personal Finance Research Centre at Bristol University and Commissioned by Standard Life Bank. “The use of credit to meet everyday expenditure was a way of life,” the report said. “For some the line between needs and wants was virtually indistinguishable.”

Figures from the Bank of England show that in recent weeks borrowing has soared for overdrafts, personal loans and credit cards. However, this is not necessarily all down to wayward borrowers, as many people have to borrow through these means simply to keep afloat.

The study said: “Young adults seemed especially susceptible to strong pressures to consume. Researchers found that parents are increasingly being forced to put their own finances on the line in order to bail out their adult offspring. This can involve borrowing against their homes.”

In the past going bankrupt was seen as a shameful and marked someone out as a financial failure, but this doesn’t seem to be the case now. According to the report: “A core minority saw debt consolidation and insolvency as easy ways out of problem debt.

Anne Gunther, chief executive of Standard Life Bank, said: “We are not only seeing people trying to ‘keep up with the Joneses’ but also aspiring to a lifestyle more akin to A-list celebrities. Credit is not only freely available but considered a way of financing lifestyles rather than reflecting need. A seismic change in mindset is required to begin to unwind the chronic debt issues we face in the UK. Pinning your hopes on housing equity or thinking that insolvency is the easy way out is financial suicide.