Young individuals, including Gen Z and young millennials, face significant “negative wealth” challenges due to mounting debt, which limits their opportunities and future prospects, as highlighted by a recent analysis from the Fairness Foundation. The concept of negative wealth, where debts exceed assets, is associated with lower wages and reduced health outcomes in later life. The foundation advises the reinstatement of the Child Trust Fund to empower young people and enhance their societal engagement through increased asset ownership. This fund aims to assist individuals in building a financial cushion and improving their resilience to economic shocks.
According to Will Snell, CEO of the Fairness Foundation, many individuals in the UK lack financial security, burdened by debt that deprives them of the benefits linked to even modest asset ownership, including higher future earnings, employment prospects, and improved physical and mental health, as well as increased civic engagement. The foundation’s report, “No Money, More Problems”, analyzed data from the Office for National Statistics, revealing that one-third of individuals aged 25 to 34 in Great Britain have negative wealth, with this figure reaching 47% in Wales and 18% in London. The average net debt has risen from £5,008 in 2010 to £8,313 in 2022, indicating a 25% rise in real terms after accounting for inflation.
The increase in debt can be attributed to factors such as rising rents, student loans, and the cost of living crisis, highlighting the disparity between renters and homeowners. The latter group benefits from properties generally worth more than their mortgage debt. However, this distinction is significant as women possessing assets, usually in the form of savings, at the age of 23 earn 11% higher wages by the time they reach 33, with men experiencing a 5% wage premium. Women with assets exceeding £1,000 at age 23 are also more likely to report excellent health in later life, while individuals with financial assets are more inclined to participate in voting or volunteering activities.
Although student loan repayments are exempt for certain income thresholds, the burden of repayment hinders the ability to accumulate a financial cushion. Consequently, addressing debt and the broader issue of individuals lacking financial assets becomes a priority for policymakers. This issue negatively impacts the economy, social fabric, and faith in democracy.
The solution involves considering asset-building policies like a citizens’ inheritance, providing a lump sum upon reaching adulthood, funded by increased taxes on wealth. This would ensure that everyone has a stake in the economy. StepChange, a debt charity, reports that a third of its clients seeking help last year were aged 25 to 34, indicating a significant disparity as this age group only accounts for 17% of the UK population. This demographic usually faces lower or more insecure incomes, and their propensity for experiencing life events that increase costs can lead to reliance on credit.
The charity emphasizes how rising household costs limit savings and financial resilience, creating a harmful debt cycle for young individuals.
Source: https://www.theguardian.com/society/2025/apr/05/gen-z-and-young-millennials-battling-negative-wealth-as-debt-burden-grows
