Korean in 20s, 30s bet big on lottery, cryptos, elevating their debts

[Photo by Lee Seung-hwan]

The total debt owed by people in their 20s and 30s has surged at an alarming pace in South Korea as young people have been flocking to lottery and digital coins to try their luck after finding it is getting harder to buy houses amid the lack of quality jobs that pay generous income.

Household heads in their 20s spent 1,224.5 ($1.03) on purchasing lottery tickets a month on average between January and September this year, up a whopping 313.8 percent from the same period in 2019, Maeil Business Newspaper found after studying the Statistics Korea’s household income and expenditure data on Monday. Compared to this, monthly spending on lottery purchases by all age groups averaged at 30.6 percent over the same period.

This result is based on statistics data collected from a survey on sampled heads of households.

In line with this, debts owed by people in their 20s and 30s are growing sharply.

Household debts incurred by Koreans in their 20s and 30s jumped 12.8 percent in the second quarter versus a year-ago period, indicating the sharpest growth among all age groups, which averaged at 9.1 percent, according to Maeil Business Newspaper’s study on the Bank of Korea data. By loan type, their borrowing from high-interest credit loans rose 20.1 percent, three times faster than home mortgage loans.

The sharp rise in credit loans to those in their 20s and 30s comes at a time of the stock and initial public offering (IPO) investment boom, noted the Bank of Korea. Cryptocurrency has also attracted massive investment during the same time.

Their bet on stocks and virtual coins has picked up speed in line with an increase in youth unemployment in the country.

[Graphics by Cho Jeehyun and Song Ji-yoon]

As of October, a total of 296,000 Koreans in their 30s were out of work and no longer looking for a job, 9,000 higher than a year ago after extending the growth streak for 20 straight months, according to the statistics bureau’s data released on Monday. The number of Koreans in their 30s with jobs declined by 24,000 in October and marked the 20ths month on the downward spiral.

Real unemployment rate for youth aged from 15 to 29, including part timers and those searching for a job, stood at 25.4 percent in January-June this year, versus 21.9 percent in 2015, showed a study by the Korea Economic Research Institute.

Against this backdrop, the financial health of those in their 20s and 30s is deteriorating fast.

Loan interest payment increased at the fastest rate for the households led by those in their 20s, spending 44,313 won per month in January-September, up 46 percent on year. The growth marked 13.44 percent for households led by those in their 30s, while that for total recorded only 4.08 percent.

Koreans in their 20s contributed 41.5 percent to the growth in household debts in the second quarter this year, up 11.1 percentage points from a year earlier.

Household debts to assets ratio came at 32.5 percent last year for households aged below 30, the highest among all aged groups. Those in their 30s are next with a debt-to-asset ratio at 28.4 percent.

Moreover, below 30 households were the only group that had net assets fall in 2020 versus 2015.

In a survey by the Korea Economic Research Institute, two-thirds of Koreans in their 20s and 30s complained wages have remained stubbornly low despite a spike in consumer prices, making them to turn to stock and digital coin investments for better income.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]