Quarter Of Teenagers Would Fund Big Purchase With Loan

Almost a quarter of teenagers (24 per cent) would use
personal loans or similar credit system to make large
purchases, such as a car or a house, according to the
latest research from the Nationwide Building Society.

The building society conducted the study into young people
and their finances ahead of the launch of a book about ways
to manage money - The Teenager’s Guide to Money -
which is sponsored by Nationwide.

According to the research, two-thirds of teenagers do not
feel they have a good knowledge of finance, with half of
them using the internet to find out information about
certain financial issues that they do not understand fully.
Just over a third (38 per cent) would turn to their school
for information, with the majority (83 per cent) using
their parents or guardians as a knowledge source.

“We are in danger of seeing the young people of today
grow up without the confidence or understanding to make
informed decisions about their money and plan for their
financial future,” said Stuart Bernau, executive
director of Nationwide. “The government has been
working hard to provide every young person in the UK with a
solid financial education. Following the publication of the
Leitch report earlier this year, skills have been placed
firmly on the agenda.”

Despite this, Mr Bernau has said that many teenagers will
miss the opportunity of financial education in school and
will therefore face a “complicated and perhaps
daunting” situation when it comes to dealing with
their own finances, which could include credit such as a
personal loan.

One in five teenagers do not consider debt as a bad thing,
Nationwide found. Around a third of these (32 per cent)
stated the reason for this was that “everyone is in
debt these days”. This could suggest that teenagers
of today will take on more easy loans or quick loans in the
future, something Nationwide is keen to ensure they do only
once fully aware of how to mange them.

“We want the next generation of homebuyers and
investors to use credit to their advantage and make the
most of their savings. Through financial education we can
equip today’s teenagers to make the most of their
money,” Mr Bernau said, again emphasising the need
for the nation’s young people to be taught
responsible ways to look after and manage their personal
finances.

Almost half of those surveyed (46 per cent) did not know
what an overdraft was, knowledge that is often crucial for
those heading off to university. Another issue facing
university candidates is what student bank account to
choose, with an indicator of how the current generation of
teenagers will act illustrated by the fact that 19 per cent
chose their current bank account on what gifts or
incentives were provided.

Last month, research from Halifax revealed that 11 per cent
of parents were looking to take out a personal loan in
order to support their child through university. Ten per
cent were found to be considering the remortgage of their
property to pay for their offspring’s studies.

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