South Africa’s employed youth are losing their financial footing

South Africa’s youth are at a crossroads. On the one side is a shocking 65.5% unemployment rate, on the other, for young people who are privileged enough to actively participate in the economy, their salaries don’t adequately cover them until month-end, says Bryan Habana, co-found and Chief Commercial Officer at Earned Wage Access company, Paymenow.

Worrying about the increasing cost of living seems to be at the forefront of many peoples’ minds, given the rising level of inflation and fuel prices. However, this issue is particularly plaguing for the most recently included participants in South Africa’s economy: the youth.

According to the Deloitte Global 2022 Generation Z and Millennial survey, almost 50% of these generations’ live paycheque to paycheque while, at the same time, worry that they will not be able to cover their monthly expenses – especially if something unexpected or unbudgeted should arise.

Of these young people, 67% are unable to save money at the end of the month. On a deeper level, they don’t feel financially secure and refrain from believing it’s something on the cards for their future. The survey shows that just over a quarter of Generation Zs and 30% of millennials are not confident they will be able to retire comfortably when their time comes.

Unsurprisingly, the youth have been battling financial stress since before the Covid-19 pandemic exacerbated economic challenges. As many as 43% of Generation Zs and 33% of millennials rely on a second income – whether it’s a part-time or additional full-time job – to help ease financial stress. While others turn to credit cards, high-interest payday loans and family or friends for assistance.

The problem with taking on debt to make it to payday is that it only provides temporary relief – often with a high interest rate as well as additional costs that aren’t always made transparent. This means, that at the end of the loan period, the amount owed will far exceed the amount borrowed – further aggravating the payday cycle.

“One way to help alleviate indebtedness, and provide financial security throughout the month, is Earned Wage Access (EWA). This solution allows the user to access already earned wages without the threat of a costly loan,” says Habana.

“At Paymenow, we are on a mission to bring financial peace of mind to everyone, everywhere — including the youth. Through our financial wellness and inclusion platform, we give employees the power to access a portion of their already earned salary – whenever they need it.”

Habana says that part of Paymenow’s vision is to restore the dignity and quality of life for all South Africans, including the youth facing economic stress, we take them on a financial education journey – using gamification – to not only change their approach to spending but also to teach them how to save.

By teaching our users, through our educational modules, how to properly build their credit score, we have seen 60% improvement in their credit score compared to the general South African population.

“Young people are open and ready to change the way their money works. There is no shortage of motivation to make better financial decisions. It’s up to all of us to support a platform that advances financial wellness despite the complexities of everyday life,” concludes Habana.

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