Old Mutual urges young South Africans to rethink debt habits

South Africa’s young people are entering adulthood at a time when financial pressure is no longer an exception but a daily reality. High unemployment, rising living costs, and limited access to stable income have created conditions where debt is often used not for long-term investment, but simply to get through the month.

Yet financial experts caution that debt itself is not the enemy, but rather how it is used, understood, and managed determines whether it becomes a stepping stone or a trap.

According to industry research, only about one million of South Africa’s 6.7 million young people aged 18–24 are credit active, but nearly half of those have already defaulted on loans. At the same time, youth unemployment remains extremely high, while average incomes sit far below national norms. This combination creates a cycle where credit becomes a survival tool rather than a financial lever.

For John Manyike, Head of Financial Education at Old Mutual, the focus should not be on blame, but on practical steps that can help young people regain control.

“Debt is not inherently bad, but what matters is whether it is used to build your future or simply to fund consumption that has no lasting value. The reality, however, is that many young people are already in debt, and much of it is not the productive kind. The question now is how we help them stabilise, recover, and rebuild confidence in their finances,” Manyike explains.

Manyike draws a clear distinction between “good debt” and “bad debt”. Good debt, he notes, is borrowing that can improve long-term financial stability, such as education, skills development, or assets that may increase in value over time.

Bad debt, on the other hand, is often short-term and consumption-driven, such as store accounts for non-essential items, personal loans used to cover lifestyle gaps, or credit taken without a clear repayment plan.

Industry research further shows that youth account for approximately 4% of South Africa’s total outstanding debt, with 85% of their credit exposure sitting in retail credit, 17% attributed to personal unsecured loans, and 9% in credit cards, with this debt amounting to a combined R10 billion in obligations.

For many young people, the problem is not reckless spending alone, but a combination of unemployment, informal work, and inconsistent income. Even those who do find employment often supplement earnings with side hustles to survive, Manyike says.
He warns that multiple income streams without a financial structure can still lead to instability if spending is not carefully managed.

Rather than focusing only on restriction, Manyike encourages young people to adopt simple, consistent habits that build financial resilience over time.

“The first step is awareness, because you cannot manage what you do not track,” he says.
He recommends starting with a basic monthly budget that separates needs, wants, and debt repayments. Even a simple record of spending can reveal hidden financial drains.
“Small deductions often feel harmless in isolation, but together they can erode a person’s income significantly,” Manyike notes.

He also encourages building even a small emergency buffer, rather than relying on credit for unexpected expenses.

With many young borrowers already experiencing repayment pressure, early intervention is critical. Manyike stresses that seeking help should not be seen as failure.

“If debt is becoming unmanageable, the worst thing you can do is ignore it,” he says. “Engaging a debt counsellor early can prevent a temporary problem from becoming a long-term financial setback.”

Despite the challenges, Manyike believes there is reason for optimism. The same generation facing financial strain is also the most digitally connected and entrepreneurial, increasingly using informal income streams and side hustles to adapt.

“The goal is not perfection but progress. Even small changes in how young people borrow, spend, and save can completely shift their financial trajectory over time,” he says.

Ultimately, Manyike argues, financial education must be paired with empathy.

“We are not dealing with irresponsible behaviour, we are dealing with survival strategies in a difficult economy. If we meet young people where they are, and give them the right tools, they can still build financially stable futures”.