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Avoid debts
Young people lack experience and training in how to handle money. They still have to learn how to handle their money responsibly and with the necessary restraint. It's important for them to be aware of their rights and responsibilities as consumers. Otherwise they risk losing control of their spending and getting into debt at an early age.
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Young people generally don't have substantial assets. Perhaps they have money they earned from a holiday job, pocket money, or money received as a gift. But they face many temptations from advertising and our consumer society as a whole. Young people want to be part of society and be taken seriously. Often they feel left out if they don't have certain brand-name products.
Need for role models and perspectives
The issue of young people getting into debt should not be underestimated. For them, borrowing money from family or friends is simply part of how they organize their finances on a daily basis. As a rule, young people from privileged backgrounds are slightly more reckless with their money. Socially disadvantaged young people, on the other hand, tend to tighten their belts to get by.
There are young people who are already in debt to the tune of several thousand francs. A study on youth debt in the city of Basel carried out in 2007 by the School of Social Work at FHNW (University of Applied Sciences North-western Switzerland) shows that high levels of debt are often the final link in a chain of social and health-related problems. In many cases there is a lack of prospects in terms of education or career. This can be compounded by critical life events with financial repercussions, e.g. leaving the parental home at a young age, dropping out of school or an apprenticeship, or unemployment.
Controlled spending
Young people can get into debt by buying consumer goods before they have the money they need to do so. They are copying the buying behavior of the affluent upper class and the lifestyle of the stars. At the top of the expenditure list are mobile phones and their associated costs, designer clothes, cosmetics, consumer electronics and going out.
Young people who have problems controlling their spending or who have been thrown off track financially should seek professional help as soon as possible. This will help them avoid any long-term negative impacts on their life. Local support programs and budget advice centers can help them get their finances back under control. Information on this subject can be found at www.schulden.ch and www.schuldenpraevention.ch.
Further information
2007 study on youth debt carried out by Fachhochschule Nordwestschweiz
