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Freida Richer is a licensed trustee at Grant Thornton Ltd. in Edmonton, with experience in all aspects of proposal and bankruptcy administration.

For the first time in recollection, consumers of every generation are relying on credit to live, as it is increasingly being perceived as an additional source of income – a way of life. Credit can be a benefit to consumers when used wisely, but for the financially illiterate, it poses a dangerous slope toward debt and insolvency – and each age group faces this risk for different reasons.

Today's society has been cultivated into a culture of credit, with each generation using it to spend more freely and carelessly than ever.

Credit has become so accessible that it's pushing debt levels out of hand, and licensed trustees are seeing a growing problem across all demographics of clients who are seeking financial help to deal with these debts. Each generation of consumers has demonstrated different reasons for why they have come to rely heavily on credit card debt – raising warning signs for consumers who are susceptible to these spending habits.

Members of Generation Y, also known as the millennials, have grown up spending freely with credit cards and generally lack sufficient financial literacy when it comes to credit and debt. This generation actually feels more comfortable using plastic over cash for most purchases, including purchases under $5. This might be attributed to the fact that this generation was raised with digital literacy, and so online purchases are simply a normal part of their world.

Members of Generation X face pressures to pay for mortgages, vehicle loans and other store credit. However, they feel confident in their earnings, so tend to put more day-to-day and large purchases on their cards. This generation tends to carry the most debt since people are faced with their highest income-earning years and the pressures of living a lifestyle that they cannot realistically afford.

The next group running into new financial challenges is the sandwich generation – those between their early 50s and retirement. These consumers are dealing with their own finances while helping both their college children and their aging parents financially; they often use credit to cover costs.

The retired generation, despite seeing their savings dwindle, are resistant to changing their lifestyle habits. They are turning to credit to support these habits, or find themselves on limited incomes and use cards to make up the difference. Sometimes, members of this generation enter a spiral of doom where the only way to service debt payments is to incur more debt on a different credit card or line.

So how do consumers avoid running into such troubles while immersed in our culture of credit? The answer comes down to financial literacy.

Before availing themselves of credit, consumers must understand how interest is calculated on a balance and the financial impact of making just the minimum payments. They must understand how credit use affects their credit rating/score and their future ability to obtain credit for the purchase of a home, a vehicle or an unexpected expense.

Consumers must learn to recognize signs that they may already be financially unstable. If they are consistently late with payments, nearing their credit limit or have little to no savings, the first step toward freeing themselves from debt is to take an honest look at where they stand with their debt obligations. Then, they must make it a priority to pay off their unsecured debt as aggressively as they can. They will need to adjust their income or expenses to accomplish this. And above all, they must learn to use credit if necessary, but wisely.