ABN AMRO takes action to help curb debt problems among young people

In the Netherlands, one in four young people between the ages of eighteen and twenty-six can’t pay their bills. More often than not, these problems start out harmlessly enough, usually when a youngster can’t make a small payment on time.

Here’s a typical example: a teenage boy can’t pay his EUR 10 gym membership fee. It may not sound like a lot of money, but it’s money he hasn’t got and he’s embarrassed. After all, none of his friends had a problem paying their membership fee… At home, he keeps the problem to himself because he doesn’t want to burden his parents. Money is tight all round. Late payment reminders are stuffed away in a drawer, phone calls dismissed or ignored. Within just a few months, the debt and collection fees combined exceed EUR 200.

From bad to worse

“From the age of eighteen, young people are considered to be financially independent, but sometimes it’s hard for them to appreciate the value of money or stay on top of their finances,” says Sjoerd Mesker, an online strategist at ABN AMRO. “The bank wants to help young people be financially independent and self-reliant. After all, it’s a concept that is fully aligned with our purpose: ‘Banking for better, for generations to come’.

“From a very young age, children these days see their parents paying with a debit or credit card, so it’s harder for them to appreciate the value of money. Plus youth unemployment has increased, paying in instalments is becoming more frequent and the number of zero-hours contracts is on the rise. Kids are also under more pressure to spend money online. All this has led to greater numbers of young people in debt. Ignoring or not talking about these problems quickly makes them worse, especially if a youngster feels they have no one to turn to.”

Initiatives

ABN AMRO wants to change that and has launched a series of initiatives that young people have helped create. One of them aims to provide youngsters with direct access to the bank’s very own budget coaches. Whether they bank with ABN AMRO or not, any youngster can request a meeting – even if they’re not facing debt problems. The budget coaches help them get on top of their finances and stave off money problems before they occur. If they’re currently in financial difficulty, the coaches actively help them find solutions.

Sjoerd says, “Working with our budget coaches and co-workers who are directly involved in the customer journey and experience, we’re ensuring young people have easy online access to this help and support.”

Prevention is better than cure

“We’re deploying our budget coaches to help young people with money problems. But it’s also important to help kids stay out of debt in the first place. That’s why we’ve launched an online campaign aimed at increasing financial awareness among youngsters,” says Marisja Heisterkamp, digital and customer experience specialist at ABN AMRO.

One component is the new online quiz “Wat voor geldtype ben jij?” (What kind of a spender are you?), which makes youngsters more aware of their own spending habits and gives them individualised tips. Then there’s the Snack Test, another of ABN AMRO’s online offerings. “The test basically shows how much young people spend every year on snacks and drinks at school or while travelling. This, in turn, teaches them that small expenses like these do eventually add up to lots of money. We’re using social media platforms like Instagram and Snapchat to reach young people,” says Marisja.

A healthy start

Debt is a problem facing young people from all walks of life. And since older teenagers and people in their early twenties lack life experience, they may not always realise what consequences their actions can have.

Loans are a common pitfall. “Some students will actually borrow more than they need to,” says Sjoerd, an expert with plenty of experience in this area. “Then they’re stuck for a long time with considerable student debt. Not only is that a waste of time and money, but it also means they won’t be able to borrow as much when it comes to buying a house.”

Marisja concludes, “Our aim is to make young people more financially resilient by helping them learn to manage their money in a way that fits best with their frame of reference. I think it’s terrific that the bank is contributing in this way to ensure young people get a healthy financial start in life.”