Corona puts young people in financial trouble
18 May 2020 - 6 min Reading time
More financial knowledge and involvement greatly reduces the risk of financial problems
The corona crisis is causing financial problems for many Belgian families. Not only parents are very concerned about this, young people also strongly feel the impact of corona on their financial affairs.
Through a study in collaboration with the research agency Indiville among a thousand young people between the ages of 16 and 30, Febelfin reveals to what extent the corona crisis has consequences for the financial lives of Belgian youth.
n = 1005, afname onderzoek in periode 29 april – 8 mei, 16-30 jarigen, representatief staal voor België.
What impact does the corona crisis have on young people's finances?
About 45% of Belgian young people have financial problems due to the corona crisis. For 13%, these are even serious financial problems. There are various reasons for this (depending on the age of the surveyed young people), such as:
This shows that the corona crisis has an impact on young people's finances both directly and indirectly.
35% of young people think that the corona crisis will have financial consequences for their parents. And that also has an impact on the extent to which parents can support their children financially. About 22% indicate that their parents do not have the means to do so. This percentage increases with age and thus the extent to which young people are independent (and probably also incur more costs). Among young people between the ages of 26 and 30, no fewer than 34% of parents do not have the means to help out financially.
The financial problems that some young people are currently experiencing are also reflected in their saving behaviour. 48% believe that they cannot save enough. 15% can't set aside anything at all; 5% of them even have to use their savings to make ends meet.
This also causes many young people to worry about their financial situation. In general, 39% of all young people sometimes do this, but for those who feel the impact of the corona crisis, that percentage rises to 56%. Both the own situation and that of the parents are a source of headaches.
Does the corona crisis have the same impact on every young person?
The corona crisis does not hit all young people equally hard. 85% can still put money aside today as a nest egg. 52% of them believe that they can save enough with this. 36% save even more than before the crisis.
23% of young people invest their money. A quarter of these even started during the outbreak of the corona virus.
What does the corona crisis do to the payment behavior of young people?
In order to contain the spread of the corona virus, traders and banks have been asking to pay digitally as much as possible in recent weeks. Paying by card and smartphone is therefore an extremely safe and hygienic way to pay for purchases, especially if it is contactless.
We notice that the Belgian has adjusted his / her payment behavior to this and the young people are also following en masse. The vast majority of them pay digitally. Moreover, 52% of young people pay contactless. Only 22% pay most often with cash.
Are young people well informed about their finances?
Young people know little about their money matters. Only 27% give themselves a high score when it comes to financial literacy (8, 9 or 10/10). At 24%, that is a downright bad score, ranging from 0 to 5/10. Young people know little about borrowing, insurance, pension savings and taxes in particular.
47% of them also do not know how to manage budgets and 74% do not know that banks convert savings into loans, according to an earlier study by Febelfin and Indiville.
This lack of financial knowledge goes hand in hand with a low degree of financial commitment. This is only the case for 42%. Particularly among those who have financial problems, involvement drops to an all-time low (31%). Those who do not have financial problems are more involved (51%).
In the same line: 47% of young people hate being busy with their money matters. For those who do not have financial problems, this is only 37%, but this rises to 59% for young people with financial concerns.
There appears to be a strong correlation between financial knowledge, involvement and money problems: those who are less well informed about their financial affairs are less likely to deal with money issues and more often have money problems. In this way a vicious circle is created.
Of course, this does not mean that being well informed about your finances and managing your money well automatically means that you do not have financial problems. Those with a very low income, for example, run a greater risk of financial worries. But conversely, little money knowledge and involvement increases the risk of financial problems.
Financial knowledge is therefore crucial. A young person who is well informed about his or her money matters and who feels involved will have fewer money worries and will feel happier. Together with various other bodies in the field, Febelfin is pursuing this in various ways.
On its website, Febelfin highlights various aspects of daily financial life: payments, savings and investments, borrowing and living, security, sustainability and society. Films about digital payments (contactless, with QR code, ...) or tips to avoid falling into the trap of friendship fraud are just some of the things you will find there.
