In the red is the new black - Young women and debt
Debt has become the latest fashion accessory for Australia's young women.
Credit cards aren't free money and HECS/HELP loans are real debts that actually have to be paid back. Mobile phone contracts are serious and can result in bad credit ratings.
Everyone knows these things, but why don't we take them seriously?
On Monday April 19, 2010, the Melbourne-based WIRE (Women's information and Referral Exchange) Women's Information Centre launched an enlightening report on the latest money, credit and debt trends of women across Victoria.
Funded by Consumer Affairs Victoria, the "Young Women and Money" report was conducted in response to the increasing tendency for young women between the ages of 15 and 25 years to experience increased levels of debt.
What the report said
The report said that Gen Y & Z women are highly engaged with the issue of money, but they tend to be more interested in how it could be used to satisfy immediate desires and support their lifestyles, and less interested in savings accounts or budgeting.
Most of us learn values and practices around money from our families. These attitudes have changed significantly since the days of our parents. It's no wonder, though, in the wake of mobile phones and iPods, that things have changed.
Young men's relationship with money is not characterised by the same societal pressure, though. Keeping up with the latest fashions in a world of extreme consumerism, the report suggests that "as young women grow into their 20s, the pressure to spend more money on brand items increases."
Well, fashionable brands do tend to get pricier as you get older (but apparently not wiser?)!
Major sources of financial stress
Not surprisingly, mobile phones turned out to be the major source of financial stress, followed closely by credit cards and loans.
Mobile phone plans, contracts, caps - or whatever spin your phone company puts on it - are the immediate financial concern for teenage females, especially those who are still fully or partially dependant on their parents.
The teenagers involved in the research for the report did not recognise that "mobile phones and money management were related." The report claimed that this was "probably because teenagers were more likely to be on their parents' plans or have a prepaid phone that parents paid for."
The 'easy credit' revolution has created a whirlwind of debt, particularly for women living out of home, with less expendable income than they had when dependent on their parents.
Most young women use their credit cards for lifestyle luxuries like shopping and travelling, yet the report found that young women in credit card debt have "very limited financial literacy, do not budget, do not regularly check their account balances or understand how interest works."
This isn't the only problem. The report also says that "most young women don't know how to manage their debts or how to manage their budgets to pay off their credit card bills."
When it comes to tertiary education debts the report suggested that most young women "are not anxious about their HECS debts… they do not know the level of their debt or how to pay it off, most do not even recognise it as a debt."
Alarming but true, especially considering after graduation from university or TAFE most people owe upwards of $20,000.
For more about HECS/HELP and paying for education, check out our Paying for your course page.
How to deal with financial pressures
So how do we deal with all these financial pressures, which most of us don't take the time to understand?
Samiro Douglas, CEO of WIRE, says that "Parents are the first point of information and support for young women, when it comes to money matters."
Our parents can't support us forever, though, and banks aren't exactly the home of youth-friendly explanations. In recognition of this, the Young Women and Money Report made a few suggestions, including:
- Having classes at high schools that teach relevant financial matters, such as the different types of bank accounts and how to handle phone contracts
- Making independent financial advisors available at university open days and music/arts festivals
The only hope we have is to "give young women to opportunity to learn it as they earn it", Ms. Douglas says.
You can download the full Young Women and Money report from www.wire.org.au (new window), or call them on 1300 134 130 to request a free copy of the report.
For more about money, debt and budgeting, check out our Managing money section.
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