Strategies to avoid debt traps

Succumbing to lifestyle inflation can lead to over-reliance on credit - expert.

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As a young professional, it is easy to get caught up in all the "must-haves" such as shiny wheels, a branded briefcase or snazzy, expensive shoes. All bought on credit.

However, once you have bought all the trappings a young professional needs, you can end up with a mountain of debt that you probably will not be able to afford to pay off.

Christiaan Coetzee, CEO of FinFix, says starting your professional journey is exciting with a steady income, financial independence and the ability to finally say yes to things you have been putting off.

"But with this newfound freedom comes responsibility, especially when it comes to credit. South African youth are increasingly vulnerable to debt traps, often lured by the promise of 'buy now, pay later' without fully understanding the consequences," he warns.

Recent data indicates a significant uptick in credit usage among young South Africans.

According to TransUnion's Industry Insights Report for the second quarter of 2024, the number of credit-active consumers grew by 4.7% year-over-year to 18.5 million, with Millennials and Gen Z accounting for 62% of new credit originations during the quarter.