Gen Z may be the key to fixing SA’s debt crisis

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“The kids of today” is often said with a sigh – but perhaps it’s time to rethink that. According to Sanlam’s 2025 Credit Confidence Index, Gen Z’s appetite for early credit education puts it ahead of Millennials and Gen X, and they may be the generation to help rewrite South Africa’s credit story.

Right now, that story reads more like a financial horror. DebtBusters’ Q1 2025 Debt Index shows a record number of South Africans relying on personal and payday loans to get by. The debt management and counselling company’s executive head, Benay Sager, says personal loans have become a lifeline as incomes fail to keep pace with soaring living costs – particularly electricity and fuel.

Despite inflation easing, the numbers are grim. Consumers entering debt counselling in early 2025 had 53% less purchasing power than they did in 2016. Many now spend up to 25% of their disposable income on basics such as water, electricity, rates, and transport. On average, they use 69% of their take-home pay to service debt. For top earners – those earning R35 000 or more – that figure hits a record 77%.

Debt levels are also at their highest in years. Among those seeking help with DebtBusters, 91% had personal loans – the highest ever – while 37% held payday loans. Unsecured debt among top earners is now 90% higher than it was in 2016.

The age group under the most pressure is 35 to 54 – typically parents juggling school and university fees. Data from the National Debt Counsellors’ Association shows that 77% of 35-to-44-year-olds and 76% of 45-to-54-year-olds feel anxious or stressed about money. More than 60% of South Africans aged 45 and older are using over 40% of their income just to repay debt.

But there’s a glimmer of hope. Statistics SA recently reported a drop in civil debt cases in the three months to April 2025. Civil summonses were down 16.4%, and civil judgements fell by 19.5% compared with the same period in 2024. The value of civil judgments declined by 9.7%.

Still, the numbers are way too high. In April 2025 alone, 8 049 civil judgments were issued, totalling R221.1 million. The largest contributors were services (R52.5m), money lent (R49.6m), other debts (R44.1m), and rent (R30.2m).

How different generations handle debt

Sanlam Credit Solutions’s Credit Confidence Index shows a stark generational divide in how South Africans manage debt, use credit, and build financial resilience.

Based on data from more than 818 000 users, the research shows that:

  • Millennials are under the most financial strain, with over 165 000 spending more than 50% of their income on debt – yet they’re also the most likely to seek help.
  • Gen X, despite similar risk profiles, is far less likely to access debt support, indicating deep-rooted trust issues and financial literacy gaps.
  • Gen Z is emerging as South Africa’s most financially optimistic and digitally savvy group – showing strong habits and openness to credit education early on.

Afua Darko, the head of business at Sanlam Credit Solutions, says the findings highlight critical insights into how different age groups engage with credit – and what this means for the future of financial resilience in the country.

“Understanding these generational patterns is key to empowering South Africans across all generations to achieve credit confidence,” says Darko.

Sanlam says debt is avoidable and manageable with the right education, planning, and tools. Its research highlights that although revolving credit and personal loans are major stress factors across all age groups, many South Africans are not using this credit to build long-term assets. Only 17% of Millennials currently have home loans – pointing to delayed or inaccessible wealth-building opportunities.

Millennials face the sharpest debt pressure

Gen X includes those born between 1965 and 1980, making them 44 to 60 years old. Millennials were born between 1981 and 1996, placing them between the ages of 29 and 44. Gen Z covers those born from 1997 to 2012, who will be between 13 and 28 years old in 2025.

The Index data shows that Millennials are under the most acute debt stress, with more than half classified as high credit risks that lenders are wary of because there’s a higher probability that they will not repay borrowed money on time or at all.

As many as 165 000 Millennials are dedicating more than 50% of their monthly income to servicing debt, according to records from VeriCred Credit Bureau.

Darko says many have turned to debt counselling, with 56% of debt-stressed Millennials engaging Sanlam Credit coaches in recent months for support.

“Millennials are carrying the weight of unsecured credit, rising living costs, and delayed asset acquisition like home ownership,” says Darko. “The encouraging sign is that this group is actively seeking support – they’re not shying away from their financial reality.”

In contrast, Gen X users, while facing similar levels of credit risk, are far more sceptical about solutions such as debt counselling. The report attributes this hesitance to lingering financial education gaps and generational attitudes towards formal financial assistance.

Gen Z bucks the trend

While many South Africans are struggling under the weight of rising debt, Gen Z is emerging as a bright spot in the country’s credit landscape. According to the Index, this youngest adult generation is showing strong signs of financial optimism and digital literacy.

Although Gen Z is still relatively new to credit markets, only 4% of its members spend more than half of their income on debt. This low level of over-indebtedness puts them in a favourable position for long-term financial success – if they maintain responsible habits.

Darko notes that Gen Z is displaying a high level of digital financial literacy and a willingness to learn, adding that many are turning to credit education and early guidance to understand how to build and manage credit effectively.

“Gen Z is demonstrating a remarkable willingness to learn,” says Darko. “They’re leveraging digital tools, engaging in money conversations early, and showing real promise when it comes to building credit confidence. We’re seeing the early signs of a generation that could change the trajectory of South Africa’s credit culture.”

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