Debt amongst South African youth is on a steady rise as they fail to balance their spending priorities and saving.
A recent study by Eighty20 has revealed that approximately 20% of the 1,2 million South African youth aged from 18 to 24 were credit-active.
Students’ debt reportedly has risen to 16.5 billion as of March illustrates the lack of financial education. The worrying trend of student debt is blamed on credit providers offering easy credit which often leads to excess debt if not maintained responsibly.
“It is important to educate people from a young age about the pitfalls of credit agreements and for them to understand the different types of debt. This will lead to better decision-making in future,” said Sebastien Alexanderson, founder and Debt Counsellor at National Debt Advisors (NDA).
He has strongly warned against South African youth relying on credit to make ends meet.
To create a future debt-savvy generation, Alexanderson has stressed the importance to educate youth as early as possible around the long-term dangers of bad behaviour regarding debt.
“Young people should be encouraged to live within their means and need to be taught how to have better relationships with money to be able to build a secure future for themselves, and for our economy,’’ he said.
Subsequently, retail bank FNB recently revealed that credit-active middle-income consumers spend, on average, 30% of their income on unsecured credit and 35% on secured credit.
Secured debt, such as home loans and vehicle financing, involves you having to put down an asset as collateral in case you can not make your payments, in which case the lender may take your asset.
