As South Africa celebrates Youth Month, financial experts are urging young people to look beyond budgeting and savings to another important tool for building long-term financial independence: credit. The National Debt Counselors (NDC) say responsible credit usage can help unlock opportunities such as education, home ownership and entrepreneurship.
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Yet despite making up 43% of people under the age of 24, they account for only 0.5% of the credit market, while 72% of Gen Z South Africans have no credit history – a factor that could limit access to finance in the future.
“A good credit record is important in South Africa as it can have a direct impact on access to finance for major life goals in the future,” says Rene Moonsamy, director of National Debt Counsellors.
“Paying attention to establishing a credit history early, and understanding how to manage it successfully, can improve your chances of accessing adequate credit later in life. Your credit profile is like your financial track record, and because the length of your history is a factor lenders consider, starting early gives you a real advantage.”
Understanding where things can go wrong is just as important as knowing what to do correctly. There are many common mistakes young South Africans make when first entering the credit system – opening multiple accounts in a short period of time, making the first credit card, or believing that avoiding debt altogether is the safest strategy. Each of these can quietly set back a credit journey before it even begins.
Moonsamy says, “Most credit mistakes made by young South Africans are not a failure of discipline but a failure of information and knowledge. And that's something we can fix.”
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Central to that knowledge is the need for young South Africans to understand that not all debt is created equal. Good credit is credit that works in your favor over time. This credit is used intentionally to finance things such as education that creates earning potential, a home that increases in value, or a business that generates income.
Bad debt, on the other hand, is borrowing that costs more than the return, usually for non-essential purchases or a lifestyle you cannot maintain. The goal is not to avoid debt altogether, but to approach it with intention and understanding.
Moonsamy shares five practical steps young South Africans can take today to start building a healthy credit foundation:
- Paying accounts on time is the most important habit. Setting up debit orders or payment reminders automates timely payments and ensures consistency, which builds trust with lenders over time.
- For those starting from scratch, starting small and building intentionally is the right approach. Opening a low-limit credit card or a small retail account – and using it responsibly, paying it off in full every month – is how a track record is established without taking unnecessary risks.
- It is equally important to keep loan utilization low. As a general rule, staying below 30% of the available limit indicates financial discipline to lenders.
- Avoiding unnecessary debt means asking honest questions before you borrow. Is this a need or want? Are monthly payments really affordable? Depreciation of assets or borrowing for impulse purchases can quickly turn into unmanageable debt.
- Monitoring credit reports regularly is good financial hygiene for everyone – not just those in financial difficulty. By regularly checking their profile through free tools like Finance 365, young South Africans can track how their financial behavior is affecting their profile over time and identify any errors or fraudulent activity before permanent damage is done. For many young people, that first credit check is also the first moment they really understand what lenders can see. That knowledge itself can be a powerful motivator.
The conversation around youth financial literacy doesn't just relate to youth. Parents and guardians play a vital role in how the next generation enters the financial system, whether helping a young adult open their first account, co-signing a deal, or simply having honest conversations about money at home.
“Financial independence isn't about earning a lot. It's about making informed decisions with what you have,” Moonsamy says. “Youth Month is a reminder that empowerment starts with education. The financial choices young South Africans make now, no matter how small, are laying the foundation for the life they want to build. We want to make sure they have the knowledge to make those choices well.”