Why Are Young People Falling into Debt?

The age of people with overdue debts in Bulgaria is steadily decreasing. In the “Personal Finance” segment, Svetozar Kostadinov offers valuable advice on how to manage your monthly budget more effectively.

People between the ages of 25 and 30 are more prone to impulsive spending, which can easily lead to taking out loans. However, their socio-economic situation is not always favourable for taking on debt. Access to credit is often relatively easy, while incomes may be unstable—temporary jobs, seasonal work, or low-skilled employment. At the same time, they have expenses for education and may rely on parental support. Not least, there is often a desire not to fall behind their peers.

Data show, however, that youth unemployment is significantly higher than the general rate. In Bulgaria, experts frequently highlight how record-low the overall unemployment rate is—5.3%—yet many young people, both here and across Europe, are neither working nor studying. The European Union is actively working to tackle youth indebtedness, primarily by reducing youth unemployment through funding from the European Social Fund Plus, which helps create opportunities for work, education, and internships.

According to Eurostat data for 2024, published this summer, the proportion of young people living in severe material and social deprivation is highest in Bulgaria, Romania, and Greece. In ten countries (Croatia, Slovenia, Poland, Estonia, Luxembourg, the Czech Republic, Latvia, Cyprus, Ireland, and Portugal), this figure is below 3%.

For the same period, the overall percentage of young people aged 15 to 29 at risk of poverty or social exclusion was 24.1%—3.1 percentage points higher than that for the total population (21.0%).

There are a few essential steps to budgeting, regardless of age. Increase your income—earning more will allow you to pay off existing debts or avoid taking out loans altogether. Monitor your expenses and create a budget; various apps can assist with this. Control your spending, no matter your income level. Postpone purchases that are not essential. Save for larger expenses rather than letting money slip away on smaller, discretionary purchases. Financial literacy is vital—read widely about managing your funds and assets. If you have more than two loans, consider consolidating them.