31st October 2026
Young people are increasingly finding themselves caught in a financial trap before they have had a proper opportunity to establish themselves in adult life.
New research from debt charity StepChange suggests that borrowing is becoming an increasingly familiar part of growing up, with potentially serious consequences for financial habits, independence and future security.
The findings should concern parents, schools, employers, financial institutions and government. The issue is not simply that some young people have accumulated debts. It is that borrowing can become an accepted way of managing everyday life, with the risk that habits established in someone's early twenties remain with them for decades.
Borrowing before financial independence
StepChange's October 2026 report, Starting Out, Falling Behind, examines the financial experiences of people aged 18–34.
One of its most striking findings is that three in four young StepChange clients surveyed had first used credit before reaching the age of 21. Over half subsequently felt they had not fully understood the risks and terms of the credit they had taken out.
Credit cards and overdrafts are familiar features of modern banking, while Buy Now Pay Later arrangements have made borrowing for everyday purchases increasingly straightforward.
The attraction is obvious. A purchase can be made immediately, with payment postponed until later. For someone with limited income, that can appear to provide a little breathing space.
But postponing payment does not make something more affordable. Several small commitments can accumulate into a substantial monthly repayment burden, particularly when someone is already struggling to pay rent, food, transport and household bills.
The Financial Conduct Authority has also investigated the growth of Buy Now Pay Later credit, identifying concerns about the financial circumstances of users and the potential for additional indebtedness.
The cost of simply getting by
It would be unfair to suggest that young people are necessarily borrowing because they are irresponsible with money.
StepChange's research identifies five interconnected influences: difficult circumstances when entering adulthood, the cost of living, insecure employment, health problems and major life events.
Almost half of the young StepChange clients surveyed said their earnings were insufficient to cover essential costs. Some 44% had borrowed to meet housing costs during the previous three years.
Housing is particularly important. High rents, deposits, energy bills and the cost of furnishing even a modest home can make independence extremely expensive.
The research also found that only 19% of 18–24-year-olds were financially independent of parents or other relatives.
For those without family support, the position can be especially difficult. A young person whose parents cannot help with a deposit, an unexpected bill or an emergency car repair may have little choice but to turn to credit.
There is a considerable difference between borrowing to purchase something unnecessary and borrowing because the money simply does not stretch far enough to cover essential living costs.
How borrowing becomes a habit
There is another aspect of the problem that deserves attention.
Young people are growing up in a world where credit is readily available and purchasing something immediately has become normalised. Online shopping, credit cards, overdrafts and deferred payment schemes all make it possible to spend money that has not yet been earned.
That does not mean every young person will develop poor financial habits. Nor does it mean that all borrowing is harmful. Sensible use of credit, with a clear repayment plan, can be part of managing personal finances.
However, there is a danger when borrowing becomes the normal response to a shortage of money.
Someone who repeatedly uses an overdraft to get through the month may eventually regard that overdraft as part of their income. Someone who uses one credit commitment to meet another can find themselves entering a cycle that becomes increasingly difficult to escape.
The longer this continues, the harder it can become to save, build an emergency fund or establish the financial foundations needed for a home and family.
There can also be consequences for credit records, making future borrowing, renting or obtaining other financial services more difficult.
Are young people being taught how to manage money?
Financial education has been discussed for many years, but there is a question about whether enough practical guidance is reaching young people before they start using credit.
Understanding interest rates, minimum credit-card payments, overdrafts, loan agreements and the consequences of missed payments should be basic life skills.
It is not enough to explain how to calculate percentages in mathematics lessons. Young people need to understand what happens when they borrow £500, make only the minimum repayment and continue spending.
They should also understand the difference between affordable borrowing and borrowing simply because a lender is prepared to offer it.
Parents and families have an important role, although not every young person has access to someone who can provide sound financial guidance.
StepChange's research identifies family as an important source of financial advice for younger adults.
Schools, colleges, employers, banks and credit providers all have a part to play.
A problem that could follow people into middle age
The consequences of financial difficulties in early adulthood do not necessarily disappear when someone reaches their thirties.
Debt repayments can restrict the ability to save for a house deposit, contribute to a pension or build financial security. They can also affect relationships, mental wellbeing and choices about employment and family life.
StepChange's wider 2025 statistics show that people aged 25–34 account for a third of its clients seeking debt advice, despite representing around 17% of the UK adult population.
That is a reminder that financial problems acquired in early adulthood can persist as people move into the next stages of their lives.
The charity's latest research is therefore about more than the amount of money owed today. It is about the financial future of a generation.
We need to change the direction of travel
There is no single solution. Better financial education will help, but it cannot compensate for inadequate wages, unaffordable housing and insecure employment.
Credit providers must also take responsibility for ensuring that borrowing is properly understood and that lending does not make an already difficult financial situation worse.
Government needs to consider how young people can move towards financial independence without having to rely on borrowing simply to pay for everyday essentials.
And perhaps we need to challenge the idea that having something immediately is more important than being able to afford it.
Young people should be encouraged to develop the habit of saving, however small the amount, rather than automatically turning to credit when money becomes tight.
Starting adult life with a manageable financial position gives people choices. Starting with accumulating debts can take those choices away.
The real concern is that Britain could be allowing a generation to develop financial habits that will make it harder for them to achieve the security and independence that previous generations often took for granted.
That is a problem worth addressing now, rather than waiting until the debts have become much harder to escape.
Starting Out, Falling Behind: Tracing Young Adults’ Journeys into Debt
https://www.stepchange.org/policy-and-research/starting-out-falling-behind.aspx