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The Sunday Times - Under 30 and $50,000 in Debt

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By Teo Cheng Wee

They are below 30, employed and mired in debt. This is the fastest-growing age group of debtors, say credit counsellors.

On average, they owe $55,000 to about seven creditors, according to new data from Credit Counselling Singapore (CCS), a non-profit group which advises debtors.

Under-30s made up 9 per cent of all cases handled by it in 2006, and 13 per cent last year.

In the first three months of this year, it went up to 15 per cent. CCS told The Sunday Times that most of these young adults are snared by materialism and a desire for the high life.

They splash money on cars, branded goods, overseas holidays, clubbing and gadgets.

Several also gamble their money away.

Young adults are not just facing credit woes - they are also forming a bigger percentage of those who become bankrupt, according to the latest figures from credit analysis firm Amequity.

Last year, people aged 30 and below made up 7 per cent of all bankrupts. In the first four months of this year, that has increased to 12 per cent.

A third report, by the Credit Bureau of Singapore (CBS), which tracks consumer credit behaviour here, also points to the same trend.

Released on June 13, the report noted that young adults aged 21 to 29 were more likely to miss their credit-card payments, or not pay them in full, compared with other age groups.

CCS president Kuo How Nam feels that it is a ‘definite cause for concern to see more young people with bigger debts’.

He puts it down to them succumbing to the temptations of consumerism, while knowing little about financial and credit management.

‘Faced with the euphoria that comes from finally earning some real money, youngsters tend to underestimate the income required of a certain lifestyle,’ he said.

Indeed, ‘overspending’ is the top reason given by people in this age group for being in debt.

Mr Leong Sze Hian, president of the Society of Financial Service Professionals, has been surprised by questions from young bankrupts at the weekly briefings for new bankrupts on the Official Assignee’s premises, where he volunteers.

‘They often ask ‘Will my guarantors be bankrupt?’. They clearly don’t realise what bankruptcy means,’ he said.

He has observed more young faces at the sessions and noted that young bankrupts are typically not rich, and that their debts usually stemmed from car loans and credit-cards debts.

Hong Kah GRC MP Zaqy Mohamad, who sees young adults once or twice a month over credit problems, feels that they have a false sense of security.

‘They always assume that because they’re young, they can earn more and their salaries can only go up. That’s why they dare to buy things on credit,’ he noted.

‘They don’t give any allowances for losing their job or suffering a pay cut.’

Besides suggesting that schools start equipping students with credit and financial management skills, Mr Kuo also pointed fingers at the ‘aggressive marketing’ of credit-card companies.

He said that financial institutions should practise more responsible lending and not encourage the proliferation of credit cards among the young.

CBS general manager Mark Rowley, however, said that ‘it’s very difficult to criticise the banks, as they’re in the business of lending money’.

The silver lining, he noted, is that the percentage of young people who default on credit-card payments is relatively low compared to other countries in the region.

‘And Singapore has the safeguard of credit-card limits. In many economies, there are no limits at all,’ he added.

This article was first published in The Straits Times on 22 June 2008.  Click here to see online version.

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4 Responses to “The Sunday Times - Under 30 and $50,000 in Debt”


  1. 1 lim

    I am expecting more once the casino is open.Especially youngsters who have not much experience in life.Hope professionals will come up with something to help them.

  2. 2 ryan

    Yes.
    It’s actually quite scary to know that this is the FASTEST growing age group.

    And to think that Fresh Graduate now can earn MORE. It’s really not about how much you can earn now, but how much you can save and invest from what you earn.

    I guess as long as anyone is working to work, they will get a decent job in Singapore. Therefore it’s very much about how much they can plan for their own Financial Future.

    Hope that more youths are aware of this soon.
    Help Spread the news… :)

  3. 3 NG

    Financial aids such as proper help to clear debt, working with institution for credit owing to etc should come forward to work with those in debt. banks, credit institution chasing these people who r in debt constantly had tore families apart, and to extreme cases, these youngster actually gave up fighting to clear their debt not knowing how they can help themselves to repay the amount slowly through monthly installment. All Financing firms lending money or any credit term make things worst with them rolling interest over and over each month instead of calling their clients up to come up with solution. think about it people. how not to have more youngsters declaring bankrupt and be heavily in debt or in worst, borrowing from illegal financial company.

  4. 4 Ryan

    Hi NG,

    I believe there are 2 sides to this.

    First, how they get themselves into this situation and secondly, how they can deal with it directly and emotionally.

    The first part require youngsters to REALLY plan out their budget (spending & saving plan). I guess this was never really being educated during these group of below 30’s education period. I was 1 of them and I didn’t receive any Financial Education during my study days. I was left on my own to figure out how to manage my own finance.

    With that gap, that created the 2nd situation, how can the youngsters deal with their debt problems. The financial institutions are more than willing to assist those in debt to overcome the problem, BUT the youngsters have to be the ONE who request for it.

    Some institutions do allow the outstanding to stop the rolling interests and plan out a monthly installment plan to allow the amount to be paid over time. Furthermore, there are consultants who are willing to help these individuals if they are willing to step forward.

    My personal advise is “Prevention is always better than Cure. Don’t be part of the statistics. ”

    Cheers!

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The current high credit card debt amongst young adults and the high percentage of retirees who are unable to meet their daily expenses, have made Governments across the region more aware of the need to educate the young on matters pertaining to Financial Management and Retirement Planning These factors provide for an excellent environment in which to launch the Money Tree programme, as a ready market is available.

 

MoneyTree is established to provide Financial & Entrepreneurship skills and knowledge to youths aged 6 to 26 , which would be required to build a career or business, as well as plan for their financial freedom. It has been created to fill the void left by the education system and school curriculum and to explore the opportunities available worldwide to further the dissemination and propagation of high-quality e-learning programmes utilising state of the art technology, and to groom the next generation of entrepreneurs.

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