FINANCIAL CRISIS FACING YOUNG ADULTS

A generation of young adults is growing up with rising debts, few savings and little chance of having a reasonable pension fund, according to a study in April 2006 by the Financial Services Authority (FSA) and Bristol University.

The research - the largest project of its kind - highlights a financial disaster in the making among 18 to 40 year olds, fuelled by high student debts, soaring house prices and a buy-now-worry-later culture.

Around a quarter of Britons aged between 20 and 39 have found themselves in financial difficulty during the past five years and 24 per cent of young adults are currently overdrawn.

"There is a real problem here. If we do not act, we could be storing up problems which will hit us in the future," says FSA chief executive John Tiner, who points out changes in both the economic and social structure.

"We now have the first generation to be leaving college with massive debts and while housing has always been a challenge it's become extremely difficult for young people in parts of the country. Yet, at the same time, the young have become serious consumers. It was difficult for an 18 year old to get a credit card 20 years ago but today it is relatively easy."

As a result, the FSA is planning a £20 million national campaign to promote financial literacy, with workplace seminars, a more prominent role for personal finance in the national curriculum and 1.5 million Money Doctor packs to be sent to new and prospective parents every year.

In fact, millions of people each year are already taking steps towards mapping out their financial future by checking their credit reports - the personal record of their credit cards, loans, mortgages and other financial information that are used by lenders when they decide whether or not to make an offer.

New online services, such as CreditExpert - a credit monitoring and identity protection service from the country's largest credit reference agency, Experian - have attracted hundreds of thousands of the kind of people who are causing the FSA such concern.

With a high-tech approach and unlimited access to personal credit information and advice, this kind of service offers a simple way for people to see their financial responsibilities and gives useful advice that helps them to improve their position.

"Seeing what you already owe can be an invaluable wake-up call when you are contemplating taking out more credit," says Jim Hodgkins, manager director of CreditExpert.

"Experian is working with the FSA on several of the financial capability projects because we feel it's vitally important in the current climate to understand your finances and be in a position to make plans for the future.

"Young people need to be aware of the importance of their credit history. Your credit report is a good place to start, because it contains information such as your repayment history that shows how well you are coping and what you should be able to manage over time."

If you would like to see your credit report, click here for a free, 30-day trial of CreditExpert.