Young, Gifted... and in Debt – 40% of SA Youth Struggling Financially

Young, Gifted... and in Debt – 40% of SA Youth Struggling Financially Sebastien Alexanderson unpacks the growing youth debt crisis and South Africa’s weak economic outlook.

5 June 2025: As Youth Month kicks off, the latest Credit Stress Report by Eighty20 reveals a troubling trend with 40% of all credit defaulters in South Africa under the age of 35. This comes at a time when the country is facing renewed economic pressure, with economists predicting flat or even negative GDP growth for Q1 2025.

Sebastien Alexanderson, Head of National Debt Advisors, says this is no coincidence.

“We’re asking our youth to thrive in a broken system—rising debt, shrinking job prospects, and little to no financial education. The result is a generation starting adulthood already trapped in financial quicksand.”

Young South Africans make up the largest group of credit-active consumers but hold just 17% of total credit—mostly in risky unsecured loans. Many enter credit through retail accounts, payday loans, and high-interest products they don’t fully understand.

At the same time, South Africa’s economy is stagnating, with just 0.1% Q1 growth expected, and the 2025 GDP forecast cut from 1.7% to 1.2%. Key sectors like mining and manufacturing are set to shrink under ongoing load shedding and infrastructure failures.

“There’s a mismatch between the economic vision we hear at summits and the lived reality of the average young South African,” says Alexanderson. “Big investment announcements mean little if the youth are drowning in debt and can't find stable work.”

President Ramaphosa’s U.S. visit brought a R5.4bn Microsoft investment in cloud and AI, but Alexanderson warns that real economic inclusion is still missing.

“What does a G20 summit, or a global investment pledge mean to a 24-year-old in Mitchells Plain or Umlazi who’s being chased for a missed R300 store payment?” he asks.

So many young South Africans are falling into debt early due to a toxic mix of factors, says Alexanderson. “Easy access to credit, often granted without proper regulation or financial education, is one of the biggest contributors. At the same time, youth unemployment remains staggeringly high—at 46.1%—leaving many without stable incomes to support even basic expenses,” said Alexanderson.

“Cultural pressures to “look successful” often push young people to spend beyond their means, prioritising appearances over financial health. All of this is compounded by a financial system that encourages consumption before teaching budgeting, trapping many in a cycle of debt before they’ve even had a chance to build stability,” said Alexanderson.

Alexanderson recommended five simple but powerful financial habits for young people:

• Know where your money goes: Make a basic monthly budget. Write down your income and every expense—even R10 airtime or fast food. You'll be shocked where the money disappears.
• Avoid debt you don’t need: Just because you're approved for credit doesn’t mean you should take it. Store accounts and payday loans often come with sky-high interest rates.
• Pay on time, every time: Late payments damage your credit score and incur penalties. Even the minimum amount matters.
• Start an emergency fund: Life happens. R100 a month saved can prevent you from relying on expensive short-term credit.
• Ask before you sign: Always ask: What's the interest rate? Are there fees? How long until I’ve paid it off?

“The system is upside down,” says Alexanderson. “We give young people high-interest credit before they understand it—by the time they learn, they’re already in default,”  adding that economic opportunity means little if young people are trapped in debt they didn’t fully understand.

About National Debt Advisors

National Debt Advisors (NDA) is South Africa’s leading debt counselling company, helping consumers become debt-free in under 60 months. Named Best Financial Advisors – South Africa 2025 by Global Financial Market Review, NDA helps clients consolidate debt into a single affordable monthly repayment while protecting assets and negotiating with creditors. NDA is committed to helping all South Africans—especially the youth—achieve true financial freedom.