“Bling-itis” pushing Brits towards bankruptcy, says expert

A personal finance expert has warned that young Brits are overspending to compete with their friends on items such as clothes, cosmetics and gadgets, leading many of them into financial difficulty, says personal finance writer Cliff D’Arcy.

Research conducted by the UK’s mobile banking network Monilink has shown that more than 25 per cent of people aged between 16 and 34 years old are spending to compete with others and one in five young people are now struggling to pay off their credit card debt.

The research has coined the phrase “Bling-itis” to explain “young people’s obsession with buying flashy goods for the sake of keeping up appearances,” says Mr D’Arcy.

According to the survey, 21 per cent of young people prefer to spend their money on “personal treats” rather than saving it.

Mr D’Arcy warned that buying luxury goods to “look good and feel good” can lead to debt.

Two-thirds of those surveyed say they are still trying to pay off credit card debts that they built up two years ago.

Tags: banking network, gadgets, Fashion, Youth, mobile banking, Money Management

Young people attracted by saving

Young people are now twice as likely to open a savings account as they were just six months ago.

A new survey from Birmingham Midshires found that one in seven (14 per cent) 18 to 24-year-olds had opened a savings account in the last three months, compared to just one in fourteen at the time of its last study, six months ago.

More and more young people are seeing the benefits of saving, with interest rates high and banks and other savings providers competing fiercely to give the best deals.

Jason Robinson, director of savings operations at Birmingham Midshires said: “With 2007 widely accepted as the year of the saver, the savings market is not only appealing more to new markets – the younger generation – but we are also noting an increase in movement with more savers, particularly older savers – switching accounts to get a better deal. The trend is certainly moving away from inertia as people vote with their feet.”

The study found that more people, particularly over-55s, are willing to move their savings around to get a better deal.

However, other research out this week claimed that large numbers of savers are unaware of just how much interest they are actually earning.

Research from Sainsbury’s Bank found that around £112 billion nationwide is being held in account where the savers just do not know what rate they are on.

Tags: Youth, bank of england, Birmingham Midshires, deal, inertia

BTL “stabilises” prices

Although borrowing costs are rising due to the five separate interest rate rises in the past year – which some say could lead to house market turbulence – the continuing strength of the buy-to-let market is providing much-needed stability.

That is the contention of Paragon, whose Buy-to-Let index for July was released today.

According to the index, rents have risen by just over three per cent over the past three months, boosting the annualised growth rate to 12 per cent.

This comes at a time in which the general housing market is widely recognised by analysts to be slowing.

Chief executive of Paragon Group Nigel Terrington, commenting on the new index, said: “Buy-to-let provides housing for young people, who otherwise would be forced to buy and be stretched beyond their means. It would result in dramatically higher levels of repossessions in the housing market.

“As owner occupiers are increasingly struggling under the weight of higher borrowing costs, buy-to-let landlords can provide accommodation for the growing number of young people who want a flexible lifestyle or who aren’t yet ready to step on the property ladder.”

Figures covering the first half of the year from the Council of Mortgage Lenders (CML) have also recently revealed that the buy-to-let market took up 12 per cent of total mortgages in Britain – a record amount.

Tags: Real estate economics, investment, landlords, Nigel Terrington, rate, cml, property ladder, Youth

Debts hitting the young

Debts are hitting the young, with over half of England’s teenagers having experienced debt by the time they are 17, according to a new survey.

The survey, by pfeg (Personal Finance Education Group), found that 90 per cent of teenagers worry about money and spending, and two thirds think about money on a daily basis.

When it comes to overdrafts and credit cards, 90 per cent view them as an easy way to spend more than they earn.

The survey was conducted as part of a schools initiative being mounted by the pfeg in a bid to deliver improved personal finance education to the young.

Wendy van den Hende, chief executive of pfeg, said: “We owe it to our young people to ensure that they have the financial acumen to deal with the responsibilities of being an adult.”

“We firmly believe that incorporating financial education into the existing school curriculum in a way that is relevant to young people’s lives is the best way to help them gain and retain the financial skills they need for the future.”

Consumer debt in the UK has now exceeded £1.25 trillion.

Tags: england, group, Youth, finance education, trillion