What do most people fail to understand about debt


Andrea Braun

To person

Dr. phil., born 1979; Research assistant at the debt counseling center of the work area "Youth and Debt" of the Johannes Gutenberg University Mainz, Hegelstrasse 59, 55122 Mainz. [email protected]

Vera lances

To person

Dipl.-Päd., Born 1986; Research assistant at the debt counseling center (see above). [email protected]

Cornelia Schweppe

To person

Dr. phil., born 1955; Professor of Social Pedagogy and Head of the Research and Documentation Center for Consumer Insolvency and Debt Counseling at Johannes Gutenberg University Mainz, Institute for Educational Science, Jakob-Welder-Weg 12, 55128 Mainz. [email protected]

Adolescents and young adults are often portrayed as "consumer idiots" in public, media and sometimes also professional discourse. [1] If one believes these descriptions, youth debt is a widespread and alarming phenomenon, the causes of which are quickly identified: The "wrong" handling of money, lack of knowledge of finances, poor planning skills and the uncontrolled fulfillment of consumer wishes are the common explanations for financial difficulties up to towards over-indebtedness among young people. The media are dominated by photos of young people with shopping bags on shopping streets, with cell phones or expensive branded clothing, as well as pulling out a golden credit card.

Many surveys on the subject are based on this attitude. According to the over-indebtedness report of the Institute for Financial Services (iff), for example, a "lack of general financial education", "uneconomical housekeeping" and "consumer behavior" are relevant triggers for over-indebtedness. [2] Even more impressive are the frequently cited results of the survey by the Federation of German Debt Collection Companies (BDIU), which explicitly refer to the group of young adults: "Too high consumer spending", "bad role model for the parents", "too little personal responsibility" and " Insufficient knowledge of economic interrelationships "are listed here as the main reasons for the indebtedness of young adults. [3]

From a scientific point of view, however, these data are not very reliable. The results of the iff overindebtedness report are based on surveys at debt counseling centers, whereby "uneconomical housekeeping" or "lack of financial competence" are specified as possible explanations in advance in the form of predefined answer categories. [4] The BDIU study is creditor-oriented and is based on assessments by Employees of the debt collection companies involved. In this respect, the data from these studies essentially reflect the opinions of employees of the relevant organizations about debt connections.

Conversely, from this perspective, the prevention and processing of financial difficulties or debts among young people is relatively clear: Financial literacy must be promoted. It is now the focus of many (educational) programs. In view of the assumed "wrong" handling of money as the cause of financial difficulties and over-indebtedness, they want to enable them to use the money available "correctly" and convey "sensible" consumption. This "sensible" action in relation to their own finances should be given to the young people, for example, by creating financial plans for their own household, permanent monitoring of income and expenditure, constant price comparison as well as imparting knowledge in dealing with financial services or information about financial traps be taught. The fulfillment of material wishes is only permitted insofar as it is compatible with the budget.

Thus, in the context of the concept of financial literacy, debt among young people is located as a personal and growing problem that essentially arises from problematic or missing individual abilities and skills and which should be counteracted accordingly by promoting these skills. The term "competence", which is anchored in cognitive psychology and educational psychology, indicates the focus on the individual. According to the definition of the psychologist Franz Weinert, competence means "the cognitive abilities and skills available in individuals or that can be learned by them in order to solve certain problems, as well as the associated motivational, volitional and social readiness and abilities to solve problems in variable situations successfully and to be able to use it responsibly ". [5]

In the following, we will discuss these assumptions and take a look at the financial difficulties of young people, who embed debt in contexts of everyday life and develop it from the meaning of money and debt for young people.

Youth Debt - An Alarming Problem?

The Federal Statistical Office provides independent data on the level of debt among young adults. According to this, 0.2 percent of the clients of the debt counseling centers belong to the 18 to 19 age group, and 6.5 percent of those seeking advice are between 20 and 25 years old. [6] Since these data are based on information from the debt counseling centers, they are also limited in several respects: On the one hand, the information provided by the debt counseling centers is voluntary and the transfer of anonymized data requires the consent of the persons advised; on the other hand, employees of debt counseling centers can only provide information about those young people who seek counseling; furthermore, in addition to the "dark figure" of indebted young people, the situation of minors with financial problems is also not taken into account in the data mentioned.

The few studies that are reputable from a scientific point of view point to the relevance of the debt issue for young people. But they also show that it is a less common phenomenon than is often assumed. In 2005, as part of a representative study by the sociologist Elmar Lange and the psychologist Karin Fries, 1003 children and adolescents between the ages of 10 and 17 were questioned about debt. Debt was defined as follows: "(We) want to speak of the debt of children and adolescents when they have borrowed money that they cannot repay immediately." [7] Following this rather broad definition, 6 percent of the 10 - Debt to 17-year-olds, whereby the average debt amount is 72 euros. If you calculate the median level of debt, it drops to 10 euros. [8]

A study from German-speaking Switzerland is revealing about the extent of indebtedness among 18 to 24 year olds. [9] It comprises 537 young people from four different types of school or training: Participants in a labor market-related bridging offer (SEMO), apprentices, graduate students and high school students. The results show that around 62 percent of 18- to 24-year-olds have no debt. Of the 38 percent of young people in debt, around a quarter each have debts of up to 100 francs, between 100 and 1,000 francs, between 1,000 and 2,400 francs and 2,500 francs and more.

Overall, the authors come to the conclusion that, on the one hand, informal debt, i.e. borrowing money mainly from parents, with usually small amounts and very short-term repayment (usually within a few days), "is part of the 'normal' organization of the everyday life of minors (heard), with which many get along well ". [10] On the other hand, they identify a small group of young people who are in debt over several thousand francs and have little prospect of repayment on time. These are young adults, the majority of whom come from socially disadvantaged families, have no further education and are often confronted with critical life events such as leaving home early, unemployment or dropping out of school or apprenticeship, including (considerable) financial cost consequences. In addition, these young people hardly receive any support from their social environment - neither in the approaching crisis situations nor in coping with them. The authors conclude: "A problematic debt situation with several thousand or ten thousand francs usually stands at the end of a chain of social and health problems." [11] Other studies confirm this result. [12]