Young adults drowning in debt PARENTS play a pivotal role in helping their children get a grip on out-of-control spending habits, writes Sophie Elsworth. AVOIDING running into debt when making vital monetary decisions for the first time is crucial to paving the way to a healthy financial future. Young Australians aged 16 to 25 carry a high proportion of debt to income. Roy Morgan data show one in three in this age group carries more than $2500 forward in credit card debt each month and those aged 21 to 25 had an average income of $791 a week. The data also found 215,000 Australians aged 18-24 had a personal loan for a car and the average amount owed was $11,010. MoneySmart senior executive Robert Drake says parents play an important role in helping guide their children to making smart financial decisions from an early age. "Parents do have a really important role, sometimes it's by being a role model, kids pick up a lot by just watching their parents," he says. You can tend to form habits that stick with you for your entire life, so being in control of your money early is a good habit to get in to. Drake says running into debt troubles can have implications later on, particularly when applying for a mortgage and personal loans. He urges those who do run into strife to take action immediately. "If people do get into trouble it's very easy to stick your head into the sand and say 'I don't know what to do'," he says. The earlier you tackle the problem the better, whether it's by getting in touch with the lender and telling them you have some problems you're dealing with or by talking to a financial counsellor. The research also found regular saving account balances for the younger generation are pretty low - 21 to 25-year-old's have $548 in the bank and 16 to 20-year-old's have only $258 stashed away. AMP financial planner Dianne Charman says access to credit has been made much easier for the younger generations compared with a few decades ago, which has allowed them to run into debt more easily. "Access to credit a few decades ago just wasn't as easy as it is now," she says. We didn't have mobile phone access to accounts that you can run up bills on, so our kids today are faced with decisions which can rack up bills more easily, and credit cards and personal loans are far more accessible than what they have been previously. Charman suggests younger Australians to find themselves a money mentor to help them when facing important financial decisions, such as parents, aunts or uncles. MoneySmart's Rookie website helps 16 to 25-year-olds with a range of financial decisions including handling credit and debt, getting a car, starting work, moving out of home, understanding mobile phone deals and plans and online transactions. Financial Counselling Australia chief executive Fiona Guthrie says some young people are very good with managing their finances but those who aren't can end up in monetary trouble early on.