Did you know that failing to service store or credit card debt may jeopardise the growth of South Africa’s economy? Outstanding payments might seem inconsequential but they may adversely affect the country’s credit rating.
Dr Habofanwe Koloba, senior lecturer at the University of the Free State’s Department of Business Management recently published an
article titled: “Access to credit and saving behaviour of generation Y students: Are we educating an over-indebted generation,” in the
Journal of Economics and Finance Studies which speaks of this phenomenon.
From analysing the financial behaviour of a group of 145 millennials and literature, Dr Koloba hypothesised that easy access to store and credit cards by Generation Y students had influenced their poor saving habits. “There is a statistically significant relationship between store or credit card usage and lack of savings among Generation Y students,” he writes.
Salvaging the situationDr Koloba advocates for the integration of financial literacy within the curriculum in addition to parents playing an active role in instilling financial intelligence in their children from a young age. He also asserts that financial institutions need to offer products that encourage saving among students rather than luring them to indebtedness.
The benefits of saving Savings are channelled into dividend-producing investments which fuel the eradication of poverty, inequality and unemployment as well as provide capital for infrastructure development. Needless to say, a consumerist society with a poor saving culture does not promise to attain these successes.