Mon 30th Jun, 2008
Credit Crunch will hurt youngest most
One of the benefits of being old has to be experience: the credit crunch that most people are experiencing with the UK’s economy has all been witnessed before. What is going on today with financial institutions last happened in the early 1990s, but even before that the older generation have witnessed times when wanting something meant saving up, not taking out yet another cheap loan.
Whilst we hope a full blown recession won’t be seen, the boom times seem to be definitely at an end for now and that means a change in financial habits. We are finally getting a wake up call that we cannot continue to borrow indefinitely and have to live without some of the things that we feel entitled to.
This adjustment should not be too difficult to take on board for older generations, but it might be a bit more of a tough adjustment for younger people. The young will have little recollection of the late eighties when the economy last went into recession and no memory of the days when loans were something only for businesses or buying a house.
The nation as a whole has grown used to the concept of regular holidays, new cars as a luxury, not a necessity, and splashing out on meals and clothes whenever the need takes. However, for many of those older than the ‘baby boomers’ (those born post-war), the memories are still fresh of the days of ’scrimp and save’.
Every generation has seen greater prosperity in this country and the days of ‘make do and mend’, ‘grow your own’ or clothes made from a penny pattern seem like myth to the youngest adults today.
The concept of going overdrawn was once upon a time considered shocking, and for many of the older generation today that viewpoint still holds. For these people, getting back into old ways of careful budgeting and knowing where every penny has gone will come easily.
For the younger generation, used to falling back on easy credit, or borrowing money to indulge a whim, budgeting is going to come as a sharp shock. The fact is that right now lenders are either unwilling or unable to lend money as lavishly as they used to, so if you don’t look after the money you have, you can’t bank on an easy loan to bail you out.