Worrying lack of financial literacy amongst young

Media release

Study reveals worrying lack of financial literacy amongst young New Zealanders

18 October 2007 – Research conducted by Veda Advantage, has revealed that 18-27 year olds, commonly referred to as Generation Y, are struggling to manage their financial obligations.

Statistics from the study by the nation’s largest credit information provider reveal a demographic that is credit-hungry, but financially immature:

o While the number of credit applications has decreased over the last three years, the Generation Y demographic is the only age group to buck that trend, with credit enquiries increasing consistently by 7% each year
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o Of the nine age groups represented in the survey, Generation Ys were responsible for a quarter of all credit enquiries – 1.3 million applications for FY07
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o The most popular credit applications were for household hire purchases and personal loans
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o Generation Ys are responsible for a third of all defaults loaded with Veda Advantage.
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Veda Advantage NZ Country Director John Roberts says, “These statistics point to a concerning lack of financial literacy amongst young adults. They are making the most of easy lines of credit to finance a new car or get the latest iPod, but the disproportionate number of defaults they are responsible for shows a complacency towards debt that other generations would be uncomfortable with. It is perhaps symptomatic of a generation used to getting what they want, when they want it.”

Mr Roberts adds, “Young people need to be aware that a failure to meet financial obligations now can have serious ramifications in later life. A default against their name for something as minor as a cell phone bill could make it difficult to get a mortgage as they get older. One might argue that such behaviour is typical of the age group, but the implications are such that it’s important to be credit-savvy from the very start of your credit lifecycle.”

ENDS