University of Bristol Personal Finance Research Centre in partnership with StepChange Debt Charity and NatWest, has published a new report: Starting out, falling behind: Tracing young adults’ journeys into debt.
The study looks beyond generational labels to understand the factors that shape the financial lives and experiences of 18-34 year-olds and their potential financial futures. It draws on four data sources to give a detailed and rich picture: StepChange client data for 71,000 young adults aged 18-34 who received advice in 2025; an online survey of around 100 young StepChange clients who recently received advice; interviews with 20 young adults who completed the client survey; and nationally representative polling of 4,200 UK adults, including 829 aged 18-34.
The polling shows that a third (34%) of young adults felt that – six years on – the pandemic continued to have scarring impacts on their career progression, substantially higher than those aged 35-49 (23%) and 50-64 (16%) respectively.
For StepChange clients in the survey, cost of living pressures and housing costs were top concerns: around half (49%) said they were not earning enough to cover their essential costs, even if they were working; and 44% had borrowed money to make rent/mortgage payments in the last three years.
Survey respondents also reported that health problems impacted their engagement with work, their earnings, and were often linked to the financial challenges that led them to StepChange. The interviews highlighted the extra burden of health-related costs; and instances of impulsive or compensatory spending linked to poor mental health.
Three-quarters (75%) of StepChange clients in the survey said they first used credit before the age of 21, with first products typically a student or other overdraft, or credit card. Four-in-ten (43%) said they had a clear plan to repay the money they had borrowed at the time they
took it out. But, with hindsight, over half (53%) felt they didn’t fully understand the risks and terms of the credit they used.
Young people’s debt escalation often followed a similar pattern as they tried to plug the shortfall between their income and expenses, with increasing consumer debt over time (including to pay for priority debts such as rent); a prolonged period of minimum repayments; debt consolidation to pay off their accumulated credit debts; renewed credit use to balance their finances; before reaching a crisis or tipping point that triggered advice-seeking.
Before going to StepChange, clients in the survey found the most useful sources of information about money, credit or debt to be websites with guidance about money (used by 63% of information-seekers); online forums (23%); and apps or digital tools (22%). While half
(48%) cited family as source of information, this scored less highly in terms of usefulness.
The StepChange clients interviewed generally did not regard their creditors as a natural source of information or help with debt problems – because they were seen as part of the problem for advancing more credit in the first place; but also because people were concerned that essential lines of credit would be cut off; or they felt ashamed and embarrassed about being in debt.
When they did engage with creditors about debt problems, interviewees wanted to be “treated like a person” rather than a balance on a system. This included proactive, individualised contact e.g. checking-in via a banking app when financial stress was visible with an empathetic, human-sounding message, rather than automated or template communications.
Young StepChange clients in the survey were generally open to the idea of using AI tools (such as ChatGPT, Copilot, Claude) to help with things like writing letters to creditors (44%); general budgeting advice (41%); and personalised budgeting advice (35%). But a quarter (26%) said they wouldn’t use AI at all for any purpose – and in the interviews, clients often expressed considerable scepticism or concerns about using AI.
This was echoed in the UK polling, where four-in-ten (43%) of 18-34 year-olds said they would not be willing to use AI for any financial tasks. This rose to half (51%) of 18-24 year olds, which was close to the population average (49%). One explanation might be that 18-24s had less need to conduct financial tasks; whereas 25-34 year-olds were generally more likely to say they would use AI for financial tasks such as general budgeting advice (30% of 25-34 year-olds, compared to 20% of the population as a whole).
For almost all (90%) of StepChange clients in the survey, the main financial goal for the future was to become debt free (if they had not already). Other important goals were managing to afford basic living expenses month to month (62%) and building a small savings pot for unexpected expenses (63%). In other words, their goals focused on achieving some modest financial stability that previous generations may have been able to take for granted.
When asked what would help them achieve their financial goals, common themes included: any relief against cost of living pressures; flexible work, either to help manage health conditions or to fit in with childcare responsibilities; and improved financial knowledge, for example, around budgeting or saving strategies.