Young people choose more debt over savings

As the number of graduates in the UK market continues to soar, so too does the amount of debt with which the average graduate is saddled. For instance, in the last three years it appears that increased studying and living costs in England and Wales has caused student debt to rise by thirteen per cent year on year. What's more, it's now estimated that the average cost of a degree is £20,000 - before the introduction of top up fees.

However, despite this growing debt problem, recent findings have revealed that young people in the UK are more likely to take out a loan - secured or unsecured - than a savings product. The conclusions, released by Alliance & Leicester, found that no matter how much the bank promoted their savings products, young people continued to find loans more attractive - thus pushing them into deeper levels of debt.

Ross Dalzell, a spokesperson for Alliance & Leicester, commented:

"There's a consensus out there that younger people must be starting to save and the savings market must be becoming younger. In reality, we find, no matter what we do, no mater what products we launch, it's the 45 plus market who are savers."

Mr Dalzell reported that 80 per cent of Alliance & Leicester's savings customers were from the older generation, adding:

"No matter how much we promote them to customers, et cetera, it's the loans they are far more likely to buy from us than any of the savings products."

Despite the increasing proportion of young people taking out loans in the UK, the younger generation are under increasing pressure to save for their golden years, particularly as rows over the future of state pensions continue to escalate both in the House of Commons and across the country. In fact, many political and financial experts are claiming that the current generation of young people may be the first in many years to be financially worse off than their parents in their old age.

Additionally, a recent study conducted by Abbey found that only 40 per cent of people aged between 25 and 34 were of the opinion that they were more financially astute than their parents. On the other hand, Abbey found that 71 per cent of the over-55s surveyed believed that they had managed their finances throughout their life more effectively than their parents' generation.

Andrew Regan is an online, freelance journalist who lists travelling and rugby among his interests.

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