Priority debts and emotional APR

It's a curious expression, so feel free to mock. But I think the term "emotional APR" might help develop young people's thinking about money.

It's not widely used. I just came across it in a press release from insurance comparison website Gocompare.com. They'd done one of those surveys that are supposed to give journalists something to write about and readers something to be sarcastic about.

This one discovered that many young people continue to get financial help from their parents even after they've left the family home. Make your own sarcastic remark now.

Commenting on this finding, the business development director at Gocompare.com talked about an "emotional APR" attached to loans from parents. He's suggesting that a levy is due on such loans, not in hard financial terms like the annual percentage rate on a loan, but as an emotional cost. Almost half those surveyed said they "argue with their parents about receiving money from them". Arguing is one angle. There are likely to be many other complex and subtle ways in which young people feel their lack of financial independence.

Some of those feelings are to do with frustration at the lack of control and self-determination. Perhaps resentment is mixed up with gratitude. Perhaps there's pressure to be grateful or an ever-present atmosphere of disapproval of spending decisions.

This is what managing money is often about. It's not clean and clear-cut. It's tied up with relationships, with friends and family. For some young people unpaid loans are the cause of relationship break-up. Some say they can't go home because they owe their mum money they haven't got. They're cut off from their mates because they can't pay what they borrowed.

Debt advisers tend to have clear criteria when sorting out debts. Priority debts are those where bad things happen if you don't repay them. Not paying your rent risks eviction. Not paying for a TV licence is a criminal offence.

Money owed to family and friends is classed as a non-priority debt. Parents and mates can't cut off your fuel supply, send you to prison or make you homeless. That's technically true (but arguable on the matter of eviction). But it's a limited view of things.

Breakdown of relationships can have a powerful impact on young people's lives. We are emotional creatures and personal well-being isn't all about tangible goods and services. It's not bonkers to think that you can survive without electric light for a while better than you can cope with losing a close friend. Exploring what's meant by emotional APR is intriguing and potentially rewarding. It can draw out from young people what risks they are running when they borrow money from people they know. Go for it.