The Growing Debt Trap Among Youth

By Dr. D. S. Kate
A recent tragedy in Chhatrapati Sambhajinagar raises an uncomfortable question about young people and money. A 19-year-old reportedly faced differences with his father over money needed for mobile-phone loan instalments and personal expenses. The episode eventually ended in a devastating family tragedy. Beyond the individual circumstances, it points towards a growing concern: our relationship with money is changing faster than our understanding of it.
Young people today enter the financial world remarkably early. Smartphones, online shopping, digital payments and instant credit have placed purchasing power literally in their hands. The generation between childhood and early adulthood has grown up surrounded by the internet. Buying something can take a few seconds. Borrowing for it can sometimes be almost as easy.
This convenience has created a new challenge. Expensive smartphones, clothes, vehicles, gadgets and lifestyle products increasingly function as symbols of social status. Social media adds another layer. Young people continuously see carefully presented images of fashionable clothes, holidays, restaurants, cars and gadgets. The desire to keep up can quietly become expensive.
Easy credit makes the temptation stronger. Pay a small amount now. Take the product home. Pay the balance through EMIs. It sounds convenient until the instalments begin accumulating. Many young borrowers may understand the monthly EMI without fully understanding the total cost of borrowing. Interest, repayment periods, penalties and the consequences of missed payments require financial knowledge. A purchase that appears affordable at the checkout counter may eventually put considerable pressure on a limited income.
Parents often become part of this cycle. Young people may have little understanding of the family’s actual income, expenses, savings and financial commitments. At the same time, parents sometimes continue fulfilling demands without discussing whether a purchase is genuinely needed or affordable. This is where financial literacy should begin.
Children should gradually learn how money enters a household and where it goes. They should understand the difference between income, savings, investment, expenditure and debt. They should know how interest works. They should also learn that every financial commitment carries responsibility.
Families can make money a normal subject of conversation. Before an expensive purchase, parents and children can ask three simple questions: Do we really need it? Can we afford it? What will it finally cost after interest? Such conversations can prevent future financial stress.
Companies naturally want young consumers to buy their products. Digital platforms make those products visible around the clock. Credit providers make purchasing easier. The final decision, however, belongs to the consumer. Debt itself is an economic tool. Used wisely, it can help finance housing, education, productive assets or business opportunities. Used carelessly for short-lived consumption and display, it can become a burden.
There is an old saying about celebrating a festival by borrowing money. That philosophy deserves reconsideration in an age when loans can be obtained with a few taps on a screen. Perhaps the most useful lesson we can give the next generation is simple: keep the list of things you truly need shorter than the list of things the market wants you to desire.
Financial literacy should therefore begin well before a young person applies for the first loan or EMI. Schools can contribute, but the first classroom remains the family. Parents who openly discuss earning, spending, saving and borrowing can prepare their children for financial independence. Money should provide choices and opportunities. Understanding it early can prevent today's attractive EMI from becoming tomorrow's burden.
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Dr D S Kate is an Economist & Founder, DS Kate Group of Industries, Aurangabad, Maharashtra. 
(Views expressed are personal)