SINGAPORE: There has been a noticeable surge in Singaporeans reaching out to social services agencies for assistance in managing their debts. Specifically, many younger Singaporeans are seeking help with their rising debt issues.
The story of a 30-year-old Singaporean, identified as San, sheds light on the growing issue of individuals resorting to borrowing money to cope with familial financial burdens, as reported by Channel News Asia. Overwhelmed by his family members’ outstanding loans, San initially believed that taking on more loans would help him settle their debts. However, after accumulating over S$80,000 in loans from seven different moneylenders over two years, he struggled to meet day-to-day household expenses, especially after the birth of his child.
“I thought that by taking (more) loans, I can pay off other loans,” San explained, reflecting on his initial mindset. However, the reality of managing a growing family alongside escalating debts forced him to seek assistance. Turning to Adullam Life Counselling, a non-profit organisation supporting those grappling with debt issues, San joined the ranks of an increasing number of Singaporeans seeking help.
Younger Singaporeans seek help with their rising debt issues
Financial counsellors note a rising trend in younger individuals seeking assistance with debt-related challenges. Arise2care Community Service, a non-profit specialising in helping debtors and those with gambling problems, reported a 50% increase in help-seekers over the past two years.
Ms Jean Lee, communications manager at Adullam Life Counselling, highlighted the impact of the pandemic on this surge. She noted that individuals who lost jobs or faced income instability during the pandemic resorted to borrowing more, creating a cycle that led to late fees and accumulating interest. She stated, “If you live paycheck to paycheck, and something like COVID-19 happens, often you do not have enough savings to service your debt, resulting in late fees and more interest. Then it spirals because … the most common strategy is that you will go and get another debt – quick money – to service that.”
While family commitments remain a significant factor in accumulating bad debt, financial counsellors have observed younger debtors borrowing for riskier reasons, such as funding investments and fueling gaming addiction.
In a notable shift, the age demographic seeking assistance has broadened instead of the previous debtors ageing 40s to 60s, Ms Lee revealed, “But right now, the second largest group in our counselling centres are those between their 30s and 40s.” Some debtors seeking help are even in their early 20s or younger, emphasising the widening age range affected by debt issues.
Financial counsellors also highlighted the role of get-rich-quick schemes, failed investments, and scams, with younger individuals investing in cryptocurrency and stock trading. The availability of buy now, pay later services has also contributed to the ease with which individuals accumulate more debt.
Ms Lee said, “These (schemes) may sound too good to be true, but it’s the kind of wealth that is just so promising that they will dump all their money into it. Some of my clients … in hopes of getting back their money, they borrow to pump in even more money … and end up in a larger debt.”
Ms Joey Tan, centre manager of Arise2care Community Service, noted the allure of unsecured loans due to their accessibility and lack of stringent credit score requirements. However, agencies stressed the need for enhanced financial education for youths to equip them with better expenditure planning skills.
Despite guidelines from service providers to prevent over-leverage, agencies argue that high interest rates and a challenging economic outlook could increase the problem. The Monetary Authority of Singapore (MAS) recently launched a basic financial planning guide to promote awareness of savings, insurance, and investment needs.
In urging those in debt to seek help promptly, Ms Tan emphasised the importance of financial education tailored to the younger demographic. “Financial education for the younger ones needs to be more engaging and suited to their level. They should have an idea of what to do with their money once they start earning. Expenditure planning is so important,” she said.
Social services agencies advocate for early intervention, stressing that seeking help sooner rather than later can facilitate faster and easier resolving debt situations.
If you are struggling with debt, as Ms Lee said, “It’s good to speak to people who specialise in it, so that they can help you.”/TISG