Latent risks in flashy lifestyles funded by debt

Beyond many people's expectations, some young white-collar employees in first-and second-tier cities across the country are being plagued by debt problems.

According to a report released by zhaopin.com, a leading job-seeking information provider, more than 20 percent of white-collar workers were in debt in 2018. Such a survey result is not that surprising, given that more and more young people now choose to be yueguang (literally spend up salary) or even overspend their salary, making themselves debtors. The yueguang lifestyle in which a person lives through borrowing brews potentially great debt risks.

For many years, stories have been widely circulated that some live a luxury way of life and even successfully build up their fortunes and become wealthy by borrowing, to encourage people to spend in a timely manner or preuse their paychecks. In recent years, the internet-based finance business targeting the young generation, even unemployed university students, has been booming rapidly, and various kinds of tempting advertisements have been created to imprint on young people the message that they should live a better life through spending and that borrowing can help them do this.

Young people nowadays have better living conditions than their parents and do not have to worry about their daily necessities. However, the younger generation extensively runs after fashion and many lack an awareness of rational spending, saving and financial management planning. So, the bombardments of consumption advertisements from merchants, the deliberate guidance of lending institutions encouraging people to spend, and their low lending approval thresholds combine to make it both convenient and easy for people to borrow, fueling young people's desires to live with debts.

However, while they think their over-spending lifestyle is worry-free or admirable, it actually means one is suffering a small debt crisis, which will turn into a major crisis if not handled well. This can be proved by a series of tragedies befalling many unsophisticated students due to their involvement in high-interest loans. Individuals may also form the habit of depending on parents to help fund their extravagant lifestyles, which could result in family discords and disputes. Also, too excessive debts could also easily lead people to insolvency, which not only goes against personal career development, but is also unfavorable to their future family life. Once a person develops the bad habit of living an extravagant and show-off life beyond their means, one could more easily fall into the vicious circle of zero savings and high liabilities. For the whole society, the phenomenon of overspending is currently quite serious and could bring risk to individuals, families and even the whole society if it continues to spread.

Owing excessive debts to banks for daily life is an unhealthy attitude toward money and consumption and also an embodiment of one's values and worldview. There's nothing wrong with moderate spending and pursuing a high-quality life, but a delicate balance between spending and saving is still needed, given that going too far is as bad as not going far enough. To increase income and reduce expenditure and to live within one's means is a rational consumption philosophy that has been handed down in Chinese society for thousands of years. Spending not beyond one's income is also a life philosophy advocated by people in modern time. Preparing for a rainy day can help one safely live through the trough of life, and only with sufficient coffers can people keep a calm mind and bring to fruition their plans for the future.

Excessive spending and overspending both have underestimated negative effects. The whole society should pay attention to this issue and comprehensively prevent and control financial and credit risks. Online credit platforms whose main businesses are consumer loans and cash loans should assume their social responsibilities and strictly abide by business ethics and relevant laws and regulations and not mislead or entice young consumers to live by borrowing. They should do a good job in background investigation and data review, improve or establish a risk assessment and monitoring system, and not encourage your credit applicants' desires for excessive consumption.

Young people should also try to establish a rational view of consumption, enhance their risk awareness, strengthen their financial knowledge and get rid of any impulse for "indebtedness" to fund an otherwise unaffordable lifestyle.

The article was first published in Beijing Youth Daily.